New Department of Labor Overtime Rule set to take effect on Dec. 1
In 2014, President Obama signed a Presidential Memorandum directing the Department of Labor to update the regulations defining which white collar workers are protected by the FLSA’s minimum wage and overtime standards. Currently, one of the requirements is that a worker must make at least $23,000 annually before he or she could be exempted from overtime pay. Starting Dec. 1, the exemption level rises to more than $47,000, which would greatly expand the number of people who qualify for overtime pay.
Federal law says employees must be paid time-and-a-half once they work more than 40 hours in a week. However, businesses may exempt workers from the requirement if their duties are “managerial” in nature.
This rules change will limit flexibility by employers and workers to set work schedules and businesses would be more likely to cut overtime, shifting more workers into salaried positions instead.
A new report from the nonpartisan Congressional Budget Office found that canceling the Obama administration’s expansion of overtime rules would result in a net increase of $2.1 billion in real income for families in 2017. The report said that while scrapping the rule would reduce worker earnings, they would still gain overall due to falling prices and rising profits.
“Real family income would fall for a small number of families because of the loss of overtime pay; rise for families with business income because of the increase in profits; and rise slightly for all families considered together because of the slight reduction in prices. Most of the increased income would accrue to families in the top fifth of the family income distribution, but average real income would increase for families in each [income group] in most years,” the report found.
The report noted that increasing business profits would also benefit some families because they own businesses. Canceling the rule would make little difference for the lowest-earning families because few of them include salaried workers that would make enough to be affected by everyone.
It is too early to know how the Trump administration will deal with this rule so for now it is important to consult with your CPA to ensure compliance.
Arizona Proposition 206 – Paid Sick Time Provision Explained
On Nov. 8, Arizona voters enacted the Fair Wages and Healthy Families Act, which amends the Arizona Minimum Wage Act to provide for incremental increases to the minimum wage for Arizona workers beginning on Jan. 1, 2017. The Act also requires that, beginning July 1, 2017, Arizona workers shall accrue, and have the legal right to use, a minimum amount of “Paid Sick Time” (PST) benefits each year.
Virtually every private employer with employees in Arizona, as well as all municipalities and school districts, will need to update their PST policy to comply on or before July 1, 2017. “Small businesses” that have gross annual revenues of less than $500,000 and are not engaged in interstate commerce or in the production of goods for interstate commerce are exempt. State of Arizona employees and federal workers are also exempt.
Small Arizona companies, which up to now have not been subject to any mandatory leave requirements, must now find the time and resources to ensure compliance with the new law.
PST is defined as “time that is compensated at the same hourly rate and with the same benefits, including health care benefits, as the employee normally earns during hours worked.” An employee’s paid sick time accrues at a rate one hour for every 30 hours worked. If the employer has 15 or more employees, the maximum accrual is 40 hours of PST per year. If the employer has fewer than 15 employees, the maximum accrual is 24 hours of PST per year. Employees in Arizona will be eligible to take paid sick time beginning 90 days after starting employment and benefit accrual begins on the first day of work.
Unused, accrued paid sick time carries over to the following year but will not affect the minimum annual accrual and use caps during that following year. The law also includes an unusual payout provision that permits an employer to pay out unused, accrued paid sick time in lieu of carryover to the following year.
In the case of a health-related absence of three or more consecutive days, a note signed by a health care professional is reasonable documentation. The law also covers an employee’s time off to care for or obtain defined services for a family member. FBN