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2016 Wage and Hour Update New Overtime Rule

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CMS presents the 2016 Wage and Hour Update New Overtime Regulations, FLSA Compliance, Communications and Action Plan for employers.

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2016 Wage and Hour Update New Overtime Rule

  1. 1. Wage & Hour Update New Overtime Rule www.cmshris.com
  2. 2. Agenda  Introduction  New Overtime Regulation  FLSA Compliance  Employer & Employee Impact  FLSA Action Plan  Employee Communications  Sage Solutions  Q & A www.cmshris.com
  3. 3. New Overtime Regulation  Effective December 1, 2016  Boost to employee income  Workers Fairly Compensated for hard work  Estimated Annualized Direct Employer Impact $239.6M - $255.3M per year www.cmshris.com
  4. 4. Overtime Regulation - Now & Then Current regulations (2004 until effective date of Final Rule, 2016) Final Rule Salary Level $455 weekly $913 weekly 40th percentile of full-time salaried workers in the lowest- wage Census region (currently the South) HCE Total Annual Compensation Level $100,000 annually $134,004 90th percentile of full-time salaried workers nationally Automatic Adjusting None Every 3 years, maintaining the standard salary level at the 40th percentile of full-time salaried workers in the lowest- wage Census region, and the HCE total annual compensation level at the 90th percentile of full-time salaried workers nationally. First Update Jan 1, 2020 - Rise to more than $51,000 Bonuses No provision to count nondiscretionary bonuses and commissions toward the standard salary level Up to 10% of standard salary level can come from non- discretionary bonuses, incentive payments, and commissions, paid at least quarterly. Standard Duties Test Wage & Hour Fact Sheet #17A for a description of EAP duties. No changes to the standard duties test. www.cmshris.com
  5. 5. Fair Labor Standards Act  Establishes Minimum Wage, Overtime Pay, Recordkeeping, and Youth Employment Standards Affecting Employees in the Private Sector and in Federal, State, and Local Governments  Employers with Annual Gross Sales Volume of $500K+, Health Care Facilities, Schools and Public Agencies – both State & Local Government  No Exemption for Small Businesses or Non-Profit Organizations  Non-Exempt Workers Entitled to Minimum Wage no less than $7.25/hr www.cmshris.com
  6. 6. Overtime  Receive Pay for Hours Worked in Excess of 40 hours in a Workweek at a Rate Not Less than One and One-Half their Regular Rate of Pay  Workweek - 7 Consecutive 24-hr Periods  Bi-weekly Payroll Example – 80 Hours Total  Week 1 – 35 hrs Week 2 - 45 hours  5 OT hours for Week 2 www.cmshris.com
  7. 7. Nondiscretionary Bonuses & Incentive Payments  Salary Basis Test  Fixed rate of pay for fixed number of hours each week  Includes Commissions  Satisfy up to 10% of New Standard Salary Threshold • Maximum $4,747.60 can be applied • Made on Quarterly or More Frequent Basis  Nondiscretionary Bonus  Awarded if Employee Meets Performance/Productivity Goals Set by Employer  Commissions or Bonuses Might not be Earned from Period to Period  Not Enough Commission or Bonuses in any Given Quarter  Entitled to Overtime Pay for any Overtime Hours worked during the Quarter  One catch-up payment at end of quarter www.cmshris.com
  8. 8. Exempt vs. Non-Exempt  Salary Exempt Employee  Receives minimum weekly wage  Exempt from FLSA OT Regulations based on job duties and responsibilities • White Collar Exemptions: Administrative, Executive, Professional, some Outside Sales or IT  No requirement to track hours  Salary Non-Exempt Employee  Salary rate for fixed number of hours  Eligible for OT after 40hrs per week at rate of 1.5 times the hourly rate  Morale booster – sense of status & autonomy www.cmshris.com
  9. 9. Duties Test  Administrative Employees  General Business Operation  Independent Judgement  Executive Employees  Department Manager  Ability to Hire/Fire Employees, Change Status, Advancement/Promotion  Professional Employees  Advance knowledge in a field of science or learning obtained by specialized instruction  Work that is original and creative in a recognized field of artistic endeavor  Teaching in a school system or educational institution  IT Staff  Performs work that requires the consistent exercise of discretion  Outside Sales Employees  Sales of tangible or intangible items, Obtains orders or contracts for services www.cmshris.com
  10. 10. Other Overtime Considerations  Federal, State & Local Laws  Follow the law that is more generous to the employee  Compensatory Time  Illegal to give Non-Exempt employees comp time instead of paying them overtime  Child Labor  Federal and state laws include special provisions to protect workers younger than 18. These laws can affect the type of work, wages, and hours that an employee can work www.cmshris.com
  11. 11. Budget Impact  Compression Issue  Salary Realignment to Maintain Valuations in Salary Structure  Limit Future Salary Increases  Increased Costs – FICA Taxes, Social Security & Medicare Payroll Taxes, Benefits Cost www.cmshris.com
  12. 12. Benefit Impact  Benefit Contributions – Medical, Dental  Qualified Retirement Plans  STD & LTD Benefits  PTO allowances  Flexible Work & Tele-Commuting www.cmshris.com
  13. 13. FLSA Action Plan  Review Employee Classifications  Evaluate employee salaries  Review Compa-ratios within each salary grades by employee’s time in position  Manage & Monitor Employee Hours  Time & Labor Management System  Various Pay Option Comparison  Impact on Internal Pay Equity  Cost Controls www.cmshris.com
  14. 14. Compensable Worktime Policies  Waiting Time  On-Call Time  Rest & Meal Periods  Sleeping Time  Meeting & Training  Travel Time  Use of electronic devices for work- related purposes outside of regular work hours www.cmshris.com
  15. 15. Employee Communications  Communicate prior to the Dec 1st Deadline  Review Updated Policies  Time Management  Increased Efficiencies  Accessibility  Maintain Morale www.cmshris.com
  16. 16. Sage Solutions  Sage HRMS  Sage HRMS Payroll  Employee Self Service  Sage Benefits Enrollment  Sage Time & Attendance  Sage HRMS HR Actions  Sage HRMS Alerts & Workflow  Sage HRMS Talent Management www.cmshris.com
  17. 17. Questions? www.cmshris.com
  18. 18. Thank you! For more information, please contact: Dawn Royer, Senior HRIS Consultant Direct: 860-269-0507 Email: droyer@cmshris.com Cost Management Services, LLC. 321 Main Street, Farmington, CT 06032 Phone: 1-800-517-9099 www.cmshris.com www.cmshris.com

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