Tag Archives: nonexempt

Exempt? Nonexempt? What’s it mean?

I am regularly asked the difference between exempt and nonexempt and whether that means the same as classifying someone as salaried or hourly. In this 3 minute video, I explain how to properly pay and classify your workers. I will explain when someone should be classified exempt, nonexempt, salaried or hourly and how to conduct the Fair Pay Test required under the Fair Labor Standards Act (FLSA).

 

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Pay Increases & Trends for 2016

pay(Post by Rick Dacri, November 2, 2015)

Pay increases for 2016 are expected to remain at 3%, the same as 2015 and up from 2014’s 2.5%. Exceptional performers are likely to enjoy increases in the 4.5% range.

Regionally, wages should be higher in the Northeast. Critical, hard to find and retain positions, such as electric and software engineers, line workers, nurses and IT will demand and get more.

Employers continue to find it difficult to recognize and motivate workers with merit budgets of only 3%. It is nearly impossible to differentiate between good and average performers with so little money. As a result, more are turning to annual short term incentive plans. These plans can quickly put cash in worthy employee’s pockets and not impact base wages. Employers are also putting more dollars into benefits, particularly into supplemental retirement plans for “older” workers.

In addition to compensation, companies are relying upon non-monetary rewards including career development, education and more exciting and challenging work assignments.

If you would like to explore options for your company, call me at 207-229-5954 or rick@dacri.com.

Other posts you may like:

  1. Compensation Trends & Pitfalls (Webinar)
  2. Overtime Eligibility to Double: Prepare for Changes
  3. FLSA: Record Keeping Requirements

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Compensation Trends & Pitfalls What You Must Know and Do (Webinar)

images-2Proposed changes in the Department of Labor overtime rules will force you to make significant changes to your pay and benefit structure; a changing economic market is driving wages upward; and an increasing number of wage and hour lawsuits has all put compensation at center stage.

In this one-hour webinar, scheduled for November 12th at 2PM, Rick Dacri will show where wages are going in 2016; how to prepare for the 2016 proposed changes to the overtime rules; and how to avoid the most common wage and hour violations.

This webinar is designed for all executives, managers, supervisors and HR professionals—anyone who supervises staff.

In this 60-minute webinar, you will learn:

  • What the expected pay increases will be in 2016
  • What will be the important 2016 compensation trends you should know
  • How to remain competitive when new hires are driving pay upward
  • Strategies to address the proposed doubling of the overtime minimum
  • A definitive way to differentiate between a salary and hourly position
  • Understanding if you must pay someone who does work on his or her time
  • Knowing when you can deduct pay from a salaried worker
  • Methods to correct mistakes in employee’s pay
  • Pay requirements when employees work through lunch, at home, or before the start of a shift
  • Avoiding mistakes in paying Independent Contractors
  • Whether you can prevent employees from discussing their pay

These are just some of the things we will cover in this packed webinar. In addition, by attending, you will also receive a copy of the PowerPoint slides and 3 white papers (Understanding Exempt Status under the FLSA; FLSA Fair Pay Questionnaire; and Improper Deductions of salaried workers).

The entire program is just $125 (my clients will receive a complimentary pass). To enroll, simply email (rick@dacri.com) or call me (207-229-5954). It’s that easy. I’ll take your information and you can send me a check.

Got questions? Give me a call and I’ll give you an answer.

Sound good. Then sign up now…and tell your colleagues too!

You may want to read:

Compensation Trends and Pitfalls: What You Must Know and Do

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Overtime Eligibility to Double: Prepare for Changes

images(Post by Rick Dacri, August 24, 2015)

The Department of Labor’s (U.S. DOL) proposed change to overtime eligibility is likely to force all employers to review and make changes to their compensation plans prior to the expected 2016 implementation.

Under the proposed rule, the salary threshold under which employees would be nonexempt—required to receive overtime pay (regular hourly rate x 1.5 for all hours worked beyond 40 hours per week), would be $970, or $50,440 per year for a full-time worker, more than doubling the salary threshold from the current level of $23,660. Afterward, the salary-level threshold would be updated annually based either on the percentile or inflation.

Earning above the $50,440 annual ($970 per week) salary level does not automatically classify an employee as exempt from mandatory overtime pay, as the duties test still comes into play.

This is a significant change to the law and all employers should review their plans now, before the likely 2016 implementation period. Don’t wait, as changes will be complex and contain plenty of pitfalls.

To avoid problems with existing exempt workers currently being paid less than the new threshold, your options include:

  1. Reclassify affected workers as nonexempt, or
  2. Increase the employees’ salaries to at least $50,440, or
  3. Reduce the hours of these workers, or
  4. Pay a lower hourly rate so that, when multiplied by time-and-one-half, weekly compensation remains unchanged

None of these steps are ideal and are likely to result in employee relation issues and increased payroll costs. To make matters worse, the DOL has stepped up enforcement of the law, doling out significant fines, attorney fees and back pay for violations.

Some other problematic areas for employers that should immediately be addressed include:

  • Misclassifying employers as exempt, when they should be non-exempt when the duties test is applied
  • Misclassifying individuals as independent contractors when they are bona-fide employees
  • Failing to pay for “off the clock” work, including non-exempt employees working, unpaid, during breaks; bringing work home; being required to respond to emails, calls and texts, etc.

To avoid problems and lawsuits:

  • Audit your compensation program and pay practices for compliance
  • Review the classification of all exempt workers, particularly those being paid under $50,440
  • Review the classification of all independent contractors
  • Put in place a safe harbor policy, which states that if an employee feels he/she has been incorrectly paid, to bring it to your attention for review.

Develop a plan now that can be rolled out in 2016 when (and if) the law changes. Call me if you need help.

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How To Pay When Your Facilities Close For Weather-Related Reasons?

stormPost by Alex Passantino, Seyfarth Shaw LLP on January 26th, 2015

As Juno prepares to pummel the Northeast with snow, employers should prepare for any weather-related closures of their offices, factories, or other facilities.  The effect of a weather-related closure on compensation requirements varies for different types of employees and also varies by state.

EXEMPT EMPLOYEES

Most employees who are exempt from federal overtime requirements and paid on a salary basis are not subject to reductions to their weekly salaries because of a closure.  Even if an exempt employee misses a full day of work, the employer may not reduce the employee’s weekly salary (unless the employee misses an entire work week).  An employer that improperly reduces an employee’s salary might lose or jeopardize the ability to treat the employee as exempt from overtime pay requirements — potentially a very costly mistake.

Even though employers will almost certainly have to pay exempt employees their full salaries regardless of storm-related closures, employers do have the right to charge exempt employees for vacation or PTO for any work that they miss.  Employees who do not have enough accrued vacation or PTO to cover the closure, however, must still be paid their full weekly salaries.

The legal rules for paying exempt employees apply in all states.  Of course, in deciding whether to charge employees with vacation or PTO, employers may also want to consider non-legal factors such as employee morale and the organization’s finances.

NON-EXEMPT EMPLOYEES

For non-exempt employees, federal law requires only that employers pay employees for the hours they actually work.

TELECOMMUTING

In assessing pay requirements for all employees, employers should keep in mind that, even if an office or other facility is closed, some employees might work remotely.  Work performed remotely generally must be paid to the same extent as work performed on an employer’s premises — even if the employer did not request that the work be performed.  Non-exempt employees working remotely must generally be paid at their usual hourly rate (and subject to the usual requirements for overtime pay).

REPORTING PAY

Certain Northeastern states have additional requirements that apply to hourly employees who report to work when a facility is closed or not operating at full capacity.  For example:

  • Connecticut has a reporting pay requirement that applies to employees in the “Mercantile trade.”  Employees in that industry must be paid four hours at their regular rate of pay, if they actually report for work.  The “Mercantile trade” is defined as the wholesale or retail selling of commodities and any operation supplemental or incidental thereto.  A two-hour guarantee is in place for the restaurant and hotel industries, if the employee was not “given adequate notice the day before” that she should not report for work.
  • Massachusetts mandates reporting pay for non-exempt employees of at least three hours at the statutory minimum wage ($9.00) if they are scheduled to work more than three hours on a given day and actually report for work.  Employees scheduled for less than three hours need only be paid for their scheduled hours.
  • New Hampshire requires reporting pay for non-exempt employees who actually report for work of at least two hours at their regular rate.
  • New Jersey requires reporting pay for non-exempt employees who actually report for work of at least one hour at their applicable wage rate (unless, prior to this report to work, the employer already made available to the employee the minimum number of hours of work agreed upon for the week).
  • New York requires “call-in pay” for non-exempt employees of at least four hours, or the number of hours in the regularly scheduled shift (whichever is less) at the basic minimum hourly wage ($8.75) for employees who actually report for work.  A 2009 New York Department of Labor opinion letter, however, interpreted the reporting-pay obligation as not applying if “the amount paid to an employee for the workweek exceeds the minimum and overtime rate for the number of hours worked and the minimum wage rate for any call-in pay owed.”  Employees working in the hospitality industry may be subject to different requirements.
  • Rhode Island requires an employer to pay an employee who reports for duty at the beginning of a work shift (where the employer offers no work for him to perform) not less than three (3) times the employee’s regular hourly rate of pay.
  • Washington, D.C., requires reporting pay of at least four hours at the statutory minimum wage ($9.50) for non-exempt employees who actually report for work if they are scheduled to work for at least four hours.  Employees scheduled for less than four hours need only be paid for their scheduled hours.

Some of the reporting pay requirements noted above may be waived if the employer makes a good faith effort to provide employees with reasonable advance notice that they should not to report to work.  Employers that foresee that their facilities will be closed should give employees who are scheduled to work as much notice as possible for both practical and wage/hour compliance reasons.

If you have questions, call Rick Dacri at rick@dacri.com or 207-229-5954.

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FLSA: Change in Law Means Employers Pay More

 

(This post was written by Rick Dacri, March 15, 2014)

President Obama directed the U.S. Department of Labor to update the Fair Labor Standards Act (FLSA) to require employers to pay more of their salaried employees overtime.  As you may know, under FLSA, employers must pay non-exempt employees (hourly) overtime pay at a rate of one and a half their regular rate of pay for hours worked in excess of 40.  Exempt workers (usually salaried) are “exempt” from the overtime pay requirements as long as the individuals are employed in a bona fide executive, administrative, professional, or outside sales force capacity.  To qualify for this exemption, the employee must be paid at least $455 per week or $23,660 per year and meet certain other requirements under the FLSA.  

The President wants to significantly raise this pay threshold, making many exempt workers non-exempt and requiring employers to now pay them overtime.

 

While it is estimated that it will take the Department of Labor at least a year to finalize any changes, it is a good idea to begin reviewing all your exempt positions now. Positions should be “tested” to ensure they meet the current means test (paid at least $455 per week) and qualify under the duties test. This latter test is complicated, but that should not deter you. The penalties for misclassifications are significant.

 

If you need some assistance in testing your exempt positions, give me a call at 207-967-0837 or email me at rick@dacri.com.

 

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Exempt Employees: Can You Dock Pay for Illness?

Posted by Rick Dacri, August 5, 2013

 This question came in from one of my HR HelpLine clients.

 Question: I have a salaried exempt employee who has lost time due to illness. Are deductions from pay allowed for absences due to sickness or disability?

 Advice: Yes. Under the federal Fair Labor Standards Act (FLSA) employers may deduct from pay for full-day absences due to sickness or disability, but only “in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by such sickness or disability.” The same rule applies “if salary replacement benefits are provided under a state disability insurance law or under a state workers’ compensation law.” If there is no such plan or practice, employers cannot deduct for sickness absences. No pay is required for any workweek in which the employee performs no work. Employers also may deduct for full-day sick or disability-related absences for employees who are not yet eligible for the salary replacement plan or practice or who have exhausted their available leave.

If you would like to learn more about Dacri’s HR HelpLine service, where you can get all your workforce questions answered, click HR HelpLine.

 

Other posts you may want to read:

  1. Interns: Employers Obligation T0 Pay
  2. Off the Clock: Must I Pay?
  3. Employee Classifications: When Must you Pay Overtime?

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