Wage and hour changes

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Information about Wage and hour changes

Published on September 30, 2014

Author: CPEhr

Source: slideshare.net

1. Wage‐and‐Hour Changes on the Horizon What Employers Need to Know About Wage‐and‐Hour Regulatory Changes in the Coming Year

2. Major Wage‐and‐Hour Regulatory Changes on the Horizon Labor and employment laws are constantly evolving and 2014 is no exception. There are major changes on the horizon relating to wage‐and‐hour regulations, and employers who remain up‐to‐date on these changes will be in an excellent position to reduce the risk of financial penalties, civil suits, and even criminal charges. This article will highlight four proposed changes to wage and hour laws which may significantly impact employers in the coming year:  Expansion of Overtime Pay  Minimum Wage Increases  The Paychecks Fairness Act  The Working Families Flexibility Act Expansion of Overtime Pay The human resources and employment world has been abuzz with the latest labor news coming out of Washington. President Obama recently signed a presidential memorandum directing the Department of Labor to revamp its overtime regulations which would expand the number of salary‐exempt employees that would qualify for overtime pay. Currently, employees who are classified as “executive” or “professional” and receive a minimum weekly salary of $455 ($23,660 per year) are exempt from receiving overtime pay. This includes a wide range of managers, financial professionals, computer technicians and other administrative positions. The current law also allows employers to define an employee's "primary duty," thereby enabling them to circumvent overtime pay for those employees. For example, if an employer declares that an employee’s primary work responsibility is managing a team of warehouse employees, in addition to other duties, the employee’s entire salary would be excluded from overtime. This applies even if those duties make up less than half of the employee's full time work. The new law would seek to redefine this application of “primary duty,” requiring a minimum number of hours performing the exempt duties to qualify as overtime‐exempt. Additionally, any new ruling will likely see an increase in the minimum $455 weekly salary which has been effect since the Bush‐era. A recent study by the Center for Budget and Policy Priorities estimates that over 5 million workers earn more than $455 per week, but less than $1000. They are recommending an increase to $984. It should be noted that many states already have thresholds higher than the federal minimums. For example, employers in New York cannot deny overtime to a salaried employee earning less than $600 a week, and California increased its rate from $600 to $640, effective 1/1/14. These rates are slated to increase further in coming years, with New York increasing to $675, and California to $800, in 2016. Employers are encouraged to watch out for new developments as this story unfolds in the coming weeks and months. Any new ruling will likely see an increase in the minimum $455 weekly salary which has been effect since the Bush‐era.

3. Minimum Wage Increases 2014 brings a new Congressional election season, and it appears the Federal Minimum Wage will be at the center of the political debate. Since the inception of the FSLA in 1938 under President Roosevelt, it has been debated whether the enforcement of a fair “living wage” should outweigh the negative effects such an enforcement might have on the economy. As the costs of living continue to change, Congress revises the FSLA to accommodate these changes. The federal minimum wage has held at $7.25 per hour since 2009, when this section of the Fair Labor Standards Act (FLSA) was last modified by Congress. However, there has been a lot of movement on Capitol Hill to increase that to $10.10 per hour in the coming year. President Obama recently defended his pitch for a higher minimum wage at a press conference by stating, “The [employees] spend a little more money, which means that suddenly, businesses have more customers, which means they make more profits, which means they can hire more workers." However, a recent survey of 1,213 employers and human resources professionals tells a different story.  54% of employers who are paying the current minimum wage say they would reduce hiring  65% say they would raise their prices on goods and services  38% say they would likely lay off employees Furthermore, the Congressional Budget Office (CBO) released a report last month stating that while increasing the minimum wage would boost the income of millions of workers, it would also mean the loss of approximately 500,000 workers by 2016. There is no doubt that this debate will continue to rage until the mid‐term elections later this year. Paycheck Fairness Act Also known as the Lilly Ledbedder Act, this is once again under consideration in Washington. Variations of the bill have been introduced several times over the past few years, but failed to garner enough support in Congress. However, it appears to be gaining traction in 2014. The intent of this law is to shrink the pay gap between men and women and has been a key component of President Obama’s efforts in equalizing pay between the genders. The sponsors of the law maintain that, on average, women earn 77 cents for every dollar earned by a man for performing equal work. They report that this discrepancy results in a disparity of approximately $434,000 over the course of their careers, and that corrective action must be taken. Under the proposed legislation, employers would be required to demonstrate that any disparity in pay between men and women is directly related to job performance and not based on the gender of the employee. Furthermore, the The intent of this law is to shrink the pay gap between men and women and has been a key component of President Obama’s efforts in equalizing pay between the genders.

4. legislation would prohibit employers from retaliating against employees who share personal salary information with co‐workers, and would increase remedies for pay discrimination by increasing compensation women can seek. This would enable women who claim they have been wronged to seek back pay and punitive damages for pay discrimination. The Republicans have countered this proposal by arguing that more laws means more litigation, not equality. They point to numerous laws over the years (such as the 1963 Equal Pay for Equal Work Act, Title VII of the 1964 Civil Rights Act, the 1978 Pregnancy Discrimination Act, the 1991 amendments to Title VII, the 1991 Glass Ceiling Commission created by the Civil Rights Act, or the 1993 Family and Medical Leave Act) which have failed to close the gender gap. Again, this law is a hot‐button topic as we approach the mid‐term elections. Working Families Flexibility Act This is another bill that had been introduced to Congress in mid‐2013. This bill would enable hourly employees, who are entitled to receive overtime pay, to instead receive compensatory time‐off. Just like overtime pay, employees would earn one and a half hours of compensatory time for each overtime hour worked. These hours could be “banked”, up to 160 hours a year. Permissible uses of these hours could be used for a variety of personal needs, such as to care for a sick family member, attend school functions, or receive medical care. Alternatively, if the employee later decides to cash out their overtime bank, the employer must comply within 30 days. Once an employee accrues 80 hours in the bank, the company can decide to pay out the overtime in cash, and not time. Another aspect of this new legislation would allow employees to request flexible working hours and conditions. The Act would permit an employee to request a change in the terms of their employment relating to such things as the total number of hours the employee is required to work, the times of day they are required to work, and the location of work. As of this publication, the bill failed to pass committee, but the proponents of the law promise to continue pushing for its passage in future congressional terms. In Conclusion We don’t have a crystal ball and cannot predict which laws will be enacted, or when. However, the winds of change in the wage‐and‐hour arena have been blowing stronger in recent months. In anticipation some of these changes employers are encouraged to review all the wage and hour policies, and their salaried and non‐exempt employee classifications, and to examine employee duties and job descriptions to make sure they are properly categorized. Additionally, since overtime, vacation, sick leave, paid time off, and meal and rest period policies and procedures are attached to the minimum wage and classifications, employers should review these items to be certain they’re also adjusted accordingly. With a little bit of proactivity, employers will be well prepared for any changes that may come their way.

5. About CPEhr Celebrating more than 30 years in business, CPEhr provides human resources solutions and Professional Employer Outsourcing (“PEO”) services to over 75,000 employees nationwide. Its extensive industry experience, combined with the flexibility afforded to a privately held corporation, allows CPEhr to deliver highly customized human resources support, while at the same time offering benefits typically associated with Fortune 500 companies. Services include:  Employment Compliance  Human Resources Administration  Payroll & Tax Administration  Management Training  Health Care Reform Compliance  Risk Management Consulting  Employee Benefits  Workers’ Compensation Insurance With corporate headquarters in Los Angeles, CPEhr is one of the largest, privately held Human Resources Outsourcing and PEO firms in the state. 9000 Sunset Blvd., #900 West Hollywood, CA 90069 www.cpehr.com info@cpehr.com PH: 800.850.7133

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