Monthly Archives

November 2016

DINER TO PAY $154K IN BACK WAGES TO 59 EMPLOYEES AFTER US DEPARTMENT OF LABOR INVESTIGATION

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Metro Diner failed to pay proper minimum wage, overtime

 

Investigation findings: An investigation by the U.S. Department of Labor’s Wage and Hour Division’s Jacksonville District Office found that Windy City Doc Holding LLC, doing business as Metro Diner, violated minimum wage and overtime provisions of the Fair Labor Standards Act.

Specifically, the employer made illegal deductions from workers’ pay when it charged servers for their uniforms – that resulted in them earning less than the legally required federal minimum wage of $7.25 per hour in the weeks that they paid for those items. The employer’s practice of sharing the tips of tipped employees with non-tipped workers, such as dishwashers, also contributed to the minimum wage violations for affected servers.

The employer also calculated overtime incorrectly when it based servers’ overtime rates on time and a half of their direct cash wages, rather than basing it on the full minimum wage, as required.

Resolution: The employer will comply with the FLSA and pay 59 employees $154,179 in back wages.

Exempt Overtime Rule Gets Put on Hold!

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The DOL ruling to increase the overtime minimum wage from $23,660 to $47,476 has been put on hold by a Federal Judge. Until a final decision is reached, employers may continue to follow the existing overtime rule.

“A preliminary injunction preserves the status quo while the court determines the department’s authority to make the final rule as well as the final rule’s validity,” said Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas in a Nov. 22 ruling.

Until a final decision comes down, employers should continue business as usual. Keep in mind that it could still be implemented later down the road. A preliminary injunction isn’t permanent, as it simply preserves the existing overtime rule—which was last updated in 2004—until the court has a chance to review the merits of the case objecting to the revisions to the regulation.

New Federal Salary Requirement

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Effective December 1, 2016, there is a new salary requirement for the administrative, executive and professional exemptions.
 
What is the New Federal Salary Requirement?
 
The new federal rule increases the salary requirement for exempt executive, administrative and professional employees from $455 per week to $913 per week effective December 1, 2016, and provides for automatic increases to the salary test every three years, beginning January 1, 2020.
 
The changes to the federal overtime rule mean that the federal salary test is now relevant to California employers beginning December 1.
 
For administrative, executive and professional employees to continue to be exempt under both California and federal law, California employers will need to follow:
 
·        The federal salary test of $913 a week, because it is now more protective than California’s test.
·        The California duties test, because it is still more protective of employees.
 
Does the New Federal Salary Test Apply to All Exemptions?
 
No. The new federal salary test applies only to the executive, administrative and professional exemptions:
·        Employees classified as exempt under California’s outside sales, commissioned inside sales, and computer professional exemptions do not have to meet the new federal salary test. They must meet any applicable California salary requirement.
·        The federal salary test does not apply to teachers (if their primary duty is teaching in an educational establishment), or to licensed lawyers or doctors (bona fide practitioners of law or medicine) because under federal law, these employees do not have to meet the salary test to be classified as exempt under the professional exemption.
·        However, California requires teachers, lawyers and doctors to meet both a duties and salary test under the professional exemption. If you employ teachers, doctors or lawyers, they must still meet the California salary requirement.
 
Do Bonuses and Commissions Count Toward the Salary Test?
 
Not in California. The new federal rule amends the federal salary basis test to allow employers to use nondiscretionary bonuses and incentive payments to satisfy a portion of the new salary test. However, California law does not allow such payments to be used to meet the salary test, so this change in the law also does not affect California employers.
 
Does the Highly Compensated Employee Exemption Apply in California?
 
No. California does not provide a “highly compensated employee” exemption.
 
Under federal law, certain “highly compensated employees” can be exempt by meeting only a minimal duties test if their compensation exceeds a certain amount. The new federal rule increases the annual compensation requirement for the federal “highly compensated employees” exemption.
 
How California Employers Can Prepare for the Federal Overtime Rule?
 
·        Increase Salaries to Retain Exempt Status
·        Reclassify Employees as Nonexempt
 
 
Contact your HR Representative if you have any questions regarding this new rule.

ACA Reporting Extended – Jan. 31, 2017 to March 2.

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The IRS determined that many employers and insurance carriers were not prepared to meet the filing deadline of January 31st. The IRS decided to extend the deadline to March 2nd. This extension only applies to the 2016 Forms 1095-C and 1095-B to be furnished to individuals,” see Notice 2016-70.

The deadline for filing Forms 1094 and 1095 has not changed. There will be no extension to file the 2016 Form 1094-B (Transmittal of Health Coverage Information Returns) along with copies of Form 1095-B, and Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) along with copies of Form 1095-C. Employers filing these forms by mail will still need to do so by Feb. 28, 2017. Employers filing electronically (as those submitting 250 or more forms are required to do) must do so by March 31.

Questions about the actual forms should be addressed to your benefits broker.

New Federal Salary Requirement

By | HR, Private, Public Blogs | No Comments
Effective December 1, 2016, there is a new salary requirement for the administrative, executive and professional exemptions.
 
What is the New Federal Salary Requirement?
 
The new federal rule increases the salary requirement for exempt executive, administrative and professional employees from $455 per week to $913 per week effective December 1, 2016, and provides for automatic increases to the salary test every three years, beginning January 1, 2020.
 
The changes to the federal overtime rule mean that the federal salary test is now relevant to California employers beginning December 1.
 
For administrative, executive and professional employees to continue to be exempt under both California and federal law, California employers will need to follow:
 
·        The federal salary test of $913 a week, because it is now more protective than California’s test.
·        The California duties test, because it is still more protective of employees.
 
Does the New Federal Salary Test Apply to All Exemptions?
 
No. The new federal salary test applies only to the executive, administrative and professional exemptions:
·        Employees classified as exempt under California’s outside sales, commissioned inside sales, and computer professional exemptions do not have to meet the new federal salary test. They must meet any applicable California salary requirement.
·        The federal salary test does not apply to teachers (if their primary duty is teaching in an educational establishment), or to licensed lawyers or doctors (bona fide practitioners of law or medicine) because under federal law, these employees do not have to meet the salary test to be classified as exempt under the professional exemption.
·        However, California requires teachers, lawyers and doctors to meet both a duties and salary test under the professional exemption. If you employ teachers, doctors or lawyers, they must still meet the California salary requirement.
 
Do Bonuses and Commissions Count Toward the Salary Test?
 
Not in California. The new federal rule amends the federal salary basis test to allow employers to use nondiscretionary bonuses and incentive payments to satisfy a portion of the new salary test. However, California law does not allow such payments to be used to meet the salary test, so this change in the law also does not affect California employers.
 
Does the Highly Compensated Employee Exemption Apply in California?
 
No. California does not provide a “highly compensated employee” exemption.
 
Under federal law, certain “highly compensated employees” can be exempt by meeting only a minimal duties test if their compensation exceeds a certain amount. The new federal rule increases the annual compensation requirement for the federal “highly compensated employees” exemption.
 
How California Employers Can Prepare for the Federal Overtime Rule?
 
·        Increase Salaries to Retain Exempt Status
·        Reclassify Employees as Nonexempt
 
 
Contact your HR Representative if you have any questions regarding this new rule.

ACA Reporting Extended – Jan. 31, 2017 to March 2.

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The IRS determined that many employers and insurance carriers were not prepared to meet the filing deadline of January 31st. The IRS decided to extend the deadline to March 2nd. This extension only applies to the 2016 Forms 1095-C and 1095-B to be furnished to individuals,” see Notice 2016-70.

The deadline for filing Forms 1094 and 1095 has not changed. There will be no extension to file the 2016 Form 1094-B (Transmittal of Health Coverage Information Returns) along with copies of Form 1095-B, and Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) along with copies of Form 1095-C. Employers filing these forms by mail will still need to do so by Feb. 28, 2017. Employers filing electronically (as those submitting 250 or more forms are required to do) must do so by March 31.

Questions about the actual forms should be addressed to your benefits broker.

Effective 12/1/2016, New Salary Requirement for Exempt (salaried) Positions

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Effective December 1, 2016, there is a new salary requirement for the administrative, executive and professional exemptions. These are employees who get paid a salary regardless of hours worked. They’re usually your managers, engineers, executives and individual who’s decision have a major impact on your company.

21 states have filed an appeal and a decision is expected the week of January 21st. However, the presiding judge has already stated the he is not taking into account the president elects view on the matter. HRI recommend that you should be prepared to pull the trigger on 12/1/2016.

What is the New Federal Salary Requirement?

The new federal rule increases the salary requirement for exempt executive, administrative and professional employees from $455 per week to $913 per week effective December 1, 2016. There is also a provision built in to provide automatic increases to the salary test every three years, beginning January 1, 2020.

The changes to the federal overtime rule mean that the federal salary test is now relevant for all states effective December 1.

For administrative, executive and professional employees to continue to be exempt under both California and federal law, California employers will need to follow:

• The federal salary test of $913 a week, because it is now more protective than California’s test.
• The California duties test, because it is still more protective of employees. Although the federal agency has put emphasis on the 51% rule.

Does the New Federal Salary Test Apply to All Exemptions?

No. The new federal salary test applies only to the executive, administrative and professional exemptions:
• Employees classified as exempt under California’s outside sales, commissioned inside sales, and computer professional exemptions do not have to meet the new federal salary test. They must meet any applicable California salary requirement.
• The federal salary test does not apply to teachers (if their primary duty is teaching in an educational establishment), or to licensed lawyers or doctors (bona fide practitioners of law or medicine) because under federal law, these employees do not have to meet the salary test to be classified as exempt under the professional exemption.
• However, California requires teachers, lawyers and doctors to meet both a duties and salary test under the professional exemption. If you employ teachers, doctors or lawyers, they must still meet the California salary requirement.

Do Bonuses and Commissions Count Toward the Salary Test?

Not in California. The new federal rule amends the federal salary basis test to allow employers to use nondiscretionary bonuses and incentive payments to satisfy a portion of the new salary test. However, California law does not allow such payments to be used to meet the salary test, so this change in the law also does not affect California employers.

Does the Highly Compensated Employee Exemption Apply in California?

No. California does not provide a “highly compensated employee” exemption.

Under federal law, certain “highly compensated employees” can be exempt by meeting only a minimal duties test if their compensation exceeds a certain amount. The new federal rule increases the annual compensation requirement for the federal “highly compensated employees” exemption.

How California Employers Can Prepare for the Federal Overtime Rule?

• Increase Salaries to Retain Exempt Status
• Reclassify Employees as Nonexempt CAREFULLY

Delivery of the News that an Exempt Employee is being reclassified as Non-Exempt Can by Tricky

Employees may questions if there were always non-exempt or it may affect their moral. You need to have a strategy and ensure that all your managers understand the reason and provide the same information to the employees.

Can a Supervisor or Manager be non-exempt?

Absolutely! An hourly employee can have management title and responsibilities and be paid by the hour. Keep in mind, they have to clock in/out including for lunch and they need to be paid overtime as any other hourly employee.

 

Click Here to download the DOL Exempt Overtime Factsheet

Federal Exempt Deadline 12/1/16, Court Expected to Issue Decision on 11/22/16

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Effective 121/1/16, all Salary Exempt employees must be earning $47,476 a year per DOL regulations. This new law is being challenged and a hearing was held on 11/16/16 to argue the case. It is expected that a decision will be announced on November 22, 2016. Employers need to comply or be ready to pull the trigger on 12/1/16 if the law is enforced.

The exempt salary threshold more than doubled from $23,660 to $47,476. By now, you should have identified the employees who may be at risk. Your choices are to either increase their pay or reclassify them as hourly non-exempt employees. If you’re reclassifying them, they can still be managers, but now they will need to take and document their meal breaks and be protected as any other hourly employee.

Which are the 21 states? Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Texans, Utah and Wisconsin.

Need assistance? Contact your HR Specialist.

California Passes Law Expanding I-9 Controls

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An amendment to California law expands state prohibitions against “unfair immigration-related practices” related to the hiring of foreign nationals. SB-1001 goes into effective on January 1, 2017.

According to the preamble of the bill, it is “unlawful for an employer to request more or different documents than are required under federal law, to refuse to honor documents tendered that on their face reasonably appear to be genuine, to refuse to honor documents or work authorization based upon the specific status or term of status that accompanies the authorization to work, or to reinvestigate or reverify an incumbent employee’s authorization to work, as specified.” Moreover, the statute gives aggrieved employees and applicants for employment a cause of action with the California Labor Commission’s Office.

SB-1001 expands existing prohibitions against unfair immigration-related practices under California law. First, the new law protects applicants for employment in addition to employees, thereby expanding punishable hiring practices beyond retaliatory acts against employees for attempting to exercise legal rights. Now, document abuse at the point of application for hire is included in punishable activity.

Second, SB-1001 prohibits employers from refusing to honor documents based on specific status or term of status and from attempting to reinvestigate or reverify the work status of a current employee unless by request of the federal government.

Finally, it expands enforcement by creating a new state remedy. Under the new law, aggrieved individuals can file a complaint with the California Labor Commission’s Office, which can penalize employers up to $10,000 per violation. By creating a state remedy, SB-1001 expands California’s previous system of enforcement through the U.S. Department of Justice (OSC) and federal appeals process, which the California Senate called “an overly cumbersome process.”

California employers should be alert of the new restrictions in conducting hiring procedures, including I-9 and E-Verify, and understand that document abuse is no longer limited to instances of “retaliation” against incumbent employees.

The California Assembly Committee on Labor Employment offered the following examples of employer document abuse:

Demanding to see a worker’s U.S. passport;
Asking for an Employment Authorization Document when the worker has already shown a state ID and “unrestricted” Social Security card;
Refusing to accept an EAD because it contains a future expiration date;
Asking to reverify work documents of an employee who presented a Green Card at the point of hire; and
Demanding to see an employee’s renewed driver’s license because the previous license used for the I-9 expired.

Hence, employers should cautiously avoid making document requests or other activities considered “unfair immigration-related practices” under the statute when dealing with new applicants as well as current employees.

EEOC to Collect Pay Data from Employers with 100 or More Employees

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Last January, the Obama Administration proposed executive action through the Equal Employment Opportunity Commission (“EEOC”), the federal watchdog for employment discrimination statutes, to require certain businesses to provide information on how much their employees were paid. This information was to be broken down based on race, gender, and ethnicity. In theory, this would allow the EEOC to easily identify pay disparities between genders. Many employers expressed serious concerns regarding the burden the data collection would cause, and on June 22, 2016, the EEOC announced it would issue a revised version of the rule, taking into account these burdens.

On July 13, 2016, the EEOC issued its revised rule. The comment period ended on August 15, 2016. The rule was made final on September 29, 2016. The revised rule did little if not nothing to address employers concerns. However, it did answer a few outstanding questions. In summary, the revised rule (which is now final) directed employers to use Box 1 on an employee’s W-2 form as the measure of reportable compensation on the upcoming EEO-1 Reports. The revised rule also clarifies that the 2017 EEO-1 Report is the first EEO-1 Report that requires this information. That deadline is March 31, 2018. Details of the revisions to the rule follow.

The Final Rule:

Who Is Required to Report Pay Data?
Employers with 100 or more employees must report aggregate W-2 income by sex, race, ethnicity, and job group.

What Information Are Employers Required to Report?

Employers must report summary W-2 income by sex, race, ethnicity, and job group:

Employers should tally the number of employees in 12 pay bands for each EEO-1 job category.

For each pay band, employers should enter the number of employees whose W-2 pay for the calendar year falls in that band.

Employers should report summary pay data. Employers should not report individual pay or salaries.

Hours Worked: To account for part-time and partial-year employment, employers would report hours worked.

The EEOC is using the Fair Labor Standards Act (FLSA) definitions for exempt and non-exempt workers.

For FLSA nonexempt workers, employers would report the hours worked as recorded for FLSA purposes.

For FLSA-exempt workers, employers would have a choice: report (1) 40 hours per week for full-time workers, and 20 hours per week for part-time workers, multiplied by the number of weeks employed that year; or (2) actual hours-worked based on data that they employers already keep. Employers will not be required to collect actual hours worked for exempt workers if they do not already keep it.

While employers have 18 months to prepare the new EEO-1 form, now is the time to prepare. We expect most payroll companies will offer assistance in gathering this data. Many HR IS systems may do the same. Do a dry run well in advance so when the deadline finally arrives, you are prepared.