Posts Tagged ‘DOL’

Are you Prepared for the New Overtime Rule?

Thursday, September 29th, 2016

On December 1, 2016, the new US DOL Overtime Rule will officially go in effect. This new rule determines which employees are exempt from overtime. Employers will not have to pay overtime to exempt employees. If an employee is non-exempt, employers need to pay overtime for actual hours worked in excess of 40 hours in a single work week. The FLSA (Fair Labor Standards Act) defines which jobs may be exempt from the overtime penalty depending on minimum salary and duties performed. Exemption categories include both a minimum salary threshold, and a duties test. Jobs will have to meet both standards to qualify for exemption.

Feeling overwhelmed? We don’t blame you. Where do you begin? How do you prepare?

Organization and communication are a major factor in businesses making the shift to compliance as painless as possible.

Below are 3 key steps in preparing for the upcoming deadline.

  1. Conduct an internal audit to identify positions and employees potentially affected.
    In recent research conducted by Paychex found that one out of five employers were not aware of the final rule, and 55% did not think the new rule applied to them.
  2. Educate your employees on time keeping and tracking overtime.
    Some employees might still receive a salary but are now required to log their worked hours. Set up training on proper time recording practices.
  3. Develop a communication plan.
    Talk to your employees, explain the new law and guidelines. Make them aware of benefit changes, if any, due to the necessary change in FLSA status from exempt to non-exempt. Misclassifications can cause challenges and serious financial consequences.

2016_telu_header_2In our upcoming 2016 Triad Employment Law Update Conference in Greensboro, North Carolina, lead attorneys from Constangy, Brooks, Smith & Prophete, LLP and CAI’s HR experts will provide registrants with key information about current and proposed changes in state and federal employment law. Building the proper infrastructure to protect your business and effectively navigate the Department of Labor’s new overtime rules and related regulations is critical to every company’s success. One of the concurrent breakout sessions at the 2016 Triad Employment Law Update Conference will focus on protecting your business and cover the shrinking white collar exemptions, interns, joint employers, postliminary duties and the DOL’s approach to enforcing these new standards.

Want to learn more about the conference and who should attend visit https://www.capital.org/triadlaw.

Every workplace has questions that need to be answered, and the sooner the better. Contact CAI’s Advice & Resolution team today!

Worker Misclassification: A Tough Issue, and Getting Tougher Every Day

Tuesday, March 26th, 2013

This is a guest post from Diane Aull. Diane is the Website Manager for Acroprint Time Recorder Company and editor of their Time For Business blog. Acroprint offers a full range of workforce management products ranging from traditional punch clocks to cloud-based solutions and cutting edge facial recognition systems.

MisclassificaitonDoes your company employ or plan to employ temporary workers, consultants or independent contractors? Then listen up! The Department of Labor (DOL) is concerned that many such workers have been misclassified as independent contractors (ICs) when in fact they are actually employees under the law.

Of course, it’s perfectly legal to hire someone as a temporary or independent worker. However, some companies misuse the IC label to avoid paying payroll taxes, overtime, minimum wage and unemployment insurance for regular employees.

This is unfair — both to the employees themselves and to those companies that do play by the rules.

What is being done?

In 2011, the DOL launched a Misclassification Initiative. This program is designed to ensure fair pay for workers and a level playing field for law-abiding employers.

To kick off the program, the DOL signed “Memoranda of Understanding” with 10 states and the Internal Revenue Service (IRS) promising to share with each other information related to worker classification audits. Since then, four more states have signed on, the most recent being Iowa in January of 2013.

Since the launch of the initiative, the DOL has collected $9.5 million in back wages for more than 11,400 workers.

Why is this important?

How a worker is classified impacts many aspects of their employment:

  • Whether the worker is covered by minimum wage or overtime laws
  • Worker eligibility for Family Medical Leave Act time off, vacation, sick days and other benefits
  • The employer’s potential liability for negligent acts of the worker
  • The ability of the worker to sue for wrongful termination or discrimination
  • Availability of workman’s compensation and unemployment insurance for the worker
  • And more…

But classification is complicated and subject to different criteria, depending on which agency you’re talking to. The IRS has one set of rules, the DOL of has another, and your state labor board may well have a third.

It’s a real mess, and it only looks to get messier.

What are the consequences of misclassification?

You may be wondering if worker classification is really all that big of a deal. The answer, in a nutshell, is YES!

Let’s say the DOL audits your workforce and determines you’ve misclassified some workers. As the first consequence you may find — depending on how you calculated their compensation — you could owe these people back pay to comply with minimum wage laws.

Additionally, if the workers put in over 40 hours in a week, you will almost certainly be liable for time-and-a-half overtime pay for the extra time. (Side note: this is a good reason to track time for all workers, including temps and ICs. If you have their time documented, the courts will generally rely on your records. Otherwise, the court may simply accept the workers’ own recollections to determine overtime pay.)

As much as paying those back wages might hurt, it could represent only the tip of the iceberg.

You could also find yourself fending off the IRS and state officials, seeking back payroll taxes (including the employer’s share of FICA), unemployment taxes, and workers comp premiums — plus interest, penalties and fines.

Beyond that, the workers themselves could pursue legal claims, including possible class-action suits.

You might not even be able to get out from under these obligations by shutting down the business. In July of 2011, the DOL obtained a judgment against the former owners of 1st National Leasing, a defunct company in Tampa, Florida. They were assessed more than $34,000 in back wages owed to former employees who had been misclassified as ICs. Yes, the owners were held personally liable and had to pay the back wages out of their own pockets.

How can you protect yourself?

If you currently have any ICs or temps on staff, your first act should be to consult with your employment law advisor to ensure you’re not taking any unnecessary chances with your worker classification. They should be able to analyze the various criteria and help you compare your current situation with what’s required.

If it’s been awhile since you’ve conducted this sort of review, you may find you need to modify some of your policies and procedures related to ICs and temps in order to maintain their classification. Your supervisors and managers may also need a “refresher course” in what it takes to maintain proper IC classification to ensure they don’t inadvertently get your business in hot water.

You may wish to also create a questionnaire or checklist you can follow to help you assess any new hires to determine their proper classification. Keeping these completed checklists on hand can be evidence of “good faith effort” in the event of a DOL audit.

Worker classification is a complicated issue, and one fraught with peril in today’s lawsuit-prone environment. You owe it to yourself and your business to be aware and take all due precautions.

If you need an accurate, flexible solution to track work hours for independent contractors or regular employees, contact Acroprint at 1-800-334-7190 or online at www.Acroprint.com.

Photo Source: Victor1558

Form 5500? Huh?

Tuesday, November 15th, 2011

The post below is a guest blog from Zach Nichols who serves as the Triad Regional Manager for CAI’s employee benefits partner Hill, Chesson & Woody.

Are you tired and ready for the holidays?  Almost 65% of you have recently completed your benefit renewals and hope to move forward in 2012 with a few less gray hairs.  Once things get going in the first quarter, who’s in charge of filing your Form 5500s?  “Form 5500 what?” you might ask.  “I heard you say something about 5500. Is that a new Holiday bonus I’m getting this year?”

Well, for those of you who are compliant, this isn’t a big deal. You already know what it is and who is responsible for filing it.  Shockingly, according to the Department of Labor, almost 47% of employers in the United States are non-compliant when it comes to filing their 5500s.  Since almost half of employers have never heard of Form 5500 or don’t understand its importance, here’s a quick rundown of what it is and how it pertains to your organization.

Plan sponsors who maintain qualified employee benefit programs such as pension plans, 401k plans or Health & Welfare plans generally must file an annual report with the Employee Benefits Security Administration/Department of Labor. This annual report, known as a Form 5500, is due within seven (7) months after the end of a plan year. 

The Form 5500 Series is part of ERISA’s overall reporting and disclosure framework, which is intended to assure that employee benefit plans are operated and managed in accordance with set standards. It also assures that participants and beneficiaries, as well as regulators, are provided or have access to sufficient information to protect the rights and benefits of participants and beneficiaries under employee benefit plans.

“Okay, you got me. I need to be filing this but my broker never told me!  How do I become compliant?”

The Department of Labor (DOL) has eased the penalties for late or missing Forms 5500 substantially by implementing the Delinquent Filer Voluntary Compliance Program (DFVCP). Under this program, sponsors will face a penalty of $10 per day up to a maximum of $750 for small plans and $2,000 for large plans (if a plan’s 5500 filing has been missed for multiple years, the penalty cap is $1,500 for small plans and $4,000 for large plans, regardless of the number of late filings submitted).  Given the statutory ability of the DOL to assess up to $1,100 per day in civil penalties, this provides a significant incentive to correct past failures to file. If the DOL determines that the Form 5500 reporting requirement was willfully avoided, fines can reach $100,000 per plan so the $2,000 DFVCP is a no brainer!

So, no, the 5500 you heard about isn’t that new Holiday bonus you were hoping for. But, it’ll ensure the DOL isn’t getting an extra holiday bonus courtesy of your organization.

Compliance Update: Vacation Pay Regulated by N.C Wage and Hour Law

Tuesday, November 9th, 2010

With the holiday season upon us, employers and HR leaders need to recognize the following when it comes to recovering vacation that has been advanced to an employee: The U.S. Department of Labor Wage and Hour Division’s position is that advanced vacation pay may not be deducted from the guaranteed salary of exempt employees.

The department regards advance vacation pay as inconsistent with deductions allowed under the definition of “salary basis” for exempt employees. A fuller explanation appears in the DOL Fact Sheet on Salary Basis.

While the N.C. Department of Labor makes no such claim, the fact is that whenever state laws differ from the federal Fair Labor Standards Act or FLSA, an employer must comply with the standard most protective to employees. Thus, the “no deduction for advanced vacation pay” rules apply here.

With that in mind, it is recommended that you do not allow advanced vacation to exempt employees if you want to recover the costs associated with this practice. Remember, ambiguous policies and practices regarding vacation pay have been construed against employers and in favor of employees.

For information on how to create an effective vacation pay policy or to discuss related issues to this item, please call a member of CAI’s Advice and Counsel team at (919) 878-9222 or (336) 668-7746.

Photo Source: The Tahoe Guy