If you are currently using the fluctuating workweek that is permitted under the Fair Labor Standard Acts (FLSA) you may want to review that decision. The Fifth Circuit Court of Appeals has drawn some limits on that method. Bill Pokorny has done a fantastic blog on discussing this recent court case. Check it out for the latest if you are currently using this type of workweek or just want to increase your current knowledge in this area.
When conducting my webinars on the FLSA requirements one area always seems confusing to attendees and that is the eight types of payments that can be excluded when calculating regular rate of pay. The one found most often to be confusing to my attendees and maybe to you as well is the one that is for bona fide overtime premiums. Bill Pokorny has done an excellent blog post on this subject that I know you will find helpful on this topic. Please take the time to check it out if you offer this type of payment or to improve your general payroll knowledge.
On August 31st, the Judge in charge of the court case for the new OT rules initiated by President Obama issued its final ruling. Basically he sided with the plaintiffs. For an excellent recap of the ruling I am referring you to Bill Pokorny’s blog.
I recently had a discussion with an associate (also an payroll consultant) about the regular rate of pay and payroll systems in general. Unfortunately the question we both had, we could not fully answer. So I am turning to my blog followers to help me out. When I started in payroll we did payroll by hand, including the regular rate of pay calculations. Of course, systems have improved since 1977. But my question is…which current systems (whether in-house or service bureau) do regular rate of pay calculations? For example, I give a bonus to an employee for finishing a project on time (nondiscretionary bonus) and he earned it in the same week it was paid. For this scenario would your payroll system do the regular rate of pay calculation? Or would you have to do it by hand and add it in? Second example, an employee receives a monthly commission on sales (hourly employee). He is paid his commission on July 15th for the month of June. Would your system be able to recalculate the additional overtime due? Or would you have to do it by hand (Excel spreadsheet)?
If your system does not do the regular rate of pay calculation, did you know this when you bought the system or signed up for the service bureau?
I appreciate any input you might have on the subject. Please include the name of the system if you can do so. Also please note if you had to have a special program written to handle the calculations.
The latest on the salary increase was released today. The U.S. Department of Labor has today announced that it will publish a Request for Information (RFI), Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees. The RFI offers the public the opportunity to provide information that will aid the Department in formulating a proposal to revise these regulations. The RFI solicits feedback on questions related to the salary level test, the duties test, inclusion of non-discretionary bonuses and incentive payments to satisfy a portion of the salary level, the salary test for highly compensated employees, and automatic updating of the salary level tests. The 60-day comment period for all issues raised in the RFI ends on September 25, 2017. The public may submit comments according to the instructions listed in the RFI as published in the Federal Register.
But the court case is still raging on. The DOL has decided to fight the ruling, not to defend the limits set by the Obama administration, but to defend the concept that the DOL has the right to change the salary limit. Lots of legal blogging on the topic so I wanted to include some of those blogs for you today:
Got a great blog post yesterday from Bill Pokorny, with Wage & Hour Insights concerning paying employees for charity work. During this time of the year this question comes up a lot for payroll professionals. In his June 7th blog he has given a clear and concise answer on when charity work could be considered hours worked. Check out his blog today.
A report released on May 10, 2017 by the Economic Policy Institute (EPI) assesses the prevalence and magnitude of one form of wage theft—minimum wage violations. Minimum wage violations is defined in the report as paying a worker an effective hourly rate that is below the legal or binding minimum wage, either state or federal law. The report looked at the 10 most populous U.S. states: California, Florida, Georgia, Illinois, Michigan, New York, North Carolina, Ohio, Pennsylvania, and Texas. These states were chosen to limit the focus of the report so EPI could carefully account for each state’s individual minimum wage policies and state-specific exemptions to wage and hour laws. Two of the states chosen, California and New York, actually have anti-wage theft laws on the books. The data for these states provides adequate ample sizes and the total workforce in these states accounts for more than half of the entire U.S. workforce. The results of the study are a bit alarming even if you take into account that the measuring of wage theft is challenging and suitable public data sources are limited. The key findings of the report are that:
- In the 10 most populous states in the country, each year 2.4 million workers covered by state or federal minimum wage laws report being paid less than the applicable minimum wage in their state—approximately 17 percent of the eligible low-wage workforce.
- The total underpayment of wages to these workers amounts to over $8 billion annually. If the findings for these states are representative for the rest of the country, they suggest that the total wages stolen from workers due to minimum wage violations exceeds $15 billion each year.
- Workers suffering minimum wage violations are underpaid an average of $64 per week, nearly one-quarter of their weekly earnings. This means that a victim who works year-round is losing, on average, $3,300 per year and receiving only $10,500 in annual wages.
- Young workers, women, people of color, and immigrant workers are more likely than other workers to report being paid less than the minimum wage, but this is primarily because they are also more likely than other workers to be in low-wage jobs. In general, low-wage workers experience minimum wage violations at high rates across demographic categories. In fact, the majority of workers with reported wages below the minimum wage are over 25 and are native-born U.S. citizens, nearly half are white, more than a quarter have children, and just over half work full time.
- In the 10 most populous states, workers are most likely to be paid less than the minimum wage in Florida (7.3 percent), Ohio (5.5 percent), and New York (5.0 percent). However, the severity of underpayment is the worst in Pennsylvania and Texas, where the average victim of a minimum wage violation is cheated out of over 30 percent of earned pay.
- The poverty rate among workers paid less than the minimum wage in these 10 states is over 21 percent—three times the poverty rate for minimum-wage-eligible workers overall. Assuming no change in work hours, if these workers were paid the full wages to which they are entitled, less than 15 percent would be in poverty.
The report gives a full explanation of the background and previous research into the problems.