On September 22, 2016, MHC&S is hosting a complimentary seminar (the first in our 2016 A Step Ahead Seminar series) on the New Overtime Regulations effective December 1, 2016. Here is a brief summary of the new legislation to help you decide if this applies to your business. If you would like more information, we invite you to join us for the seminar by registering HERE. Seating is limited.
The Final Rule
On May 18, 2016, President Barack Obama and Secretary of Labor, Thomas Perez announced the publication of the Department of Labor’s (DOL) final rules updating overtime regulations. These newly defined rules will significantly raise the salary level used to determine whether employees are eligible for overtime, and will affect more than 4 million salaried employees, according to the DOL. The goal of the new overtime regulations was to reset the income threshold to the point it would have reached with inflation adjustments had it not been frozen more than a decade ago.
The effective date of the final rule is December 1, 2016. This increases the standard salary level from $23,660 ($455 per week) to $47,476 ($913 per week). Employees earning less than $47,476, regardless of their job responsibilities, are deemed non-exempt and therefore entitled to overtime pay. Moving forward, the limit will be adjusted every three years beginning January 1, 2020.
Unless specifically exempted, employees covered by the Fair Labor Standards Act must receive pay for hours worked in excess of 40 in a 7-day workweek at a rate of not less than one and one-half of their regular rate of pay.
Note: Employees’ pay for purposes of determining their exempt/non-exempt status includes nondiscretionary bonuses, incentive pay and commissions, as long as those payments occur at least on a quarterly basis and don’t exceed 10% of the employee’s compensation.
Where to Begin
Employers should begin by identifying employees who may be impacted and assess whether changes are needed and what types of modifications are possible. Start by answering these questions:
- How many of your employees will be newly classified as non-exempt?
- How many of them routinely work more than 40 hours a week?
- What would it cost you if they continue to work more than 40 hours per workweek and are eligible for overtime?
- What systems do you need to put in place to monitor employees’ hours carefully after the new rules go into effect? The DOL says employers “may use any method they choose for tracking and recording hours as long as it is complete and accurate.”
No doubt your employees have already heard or will be hearing about the impending overtime regulation changes, and may be wondering how this will affect them. It is important that employers develop a communication plan for all employees helping them understand the changes. The best way to do this is to get started now. There is no time like the present to begin assessing your situation, ensuring changes are made by December 1, 2016.
If you want more information on this issue, please join us for the New Overtime Regulations seminar on Thursday, September 22nd. It will be held at the Independent Insurance Agents of Iowa Building, 4000 Westown Parkway, Suite 200, West Des Moines, Iowa 50266. Check-in and breakfast begin at 7:30am, with the presentation from 8:00am to 9:00am. Seating is limited so please register on-line or contact Kelsey Beyer at email@example.com /515-288-3279. For more information on this seminar and future seminars, please visit our website at www.mhcscpa.com.
A little more about us:
Located in West Des Moines, Iowa with a branch office in Winterset, Iowa, McGowen, Hurst, Clark & Smith, P.C. celebrates 65 years of extending excellent service to our clients, providing them with accounting, auditing, consulting and investment expertise.
Established in 1946, our staff has grown from 3 to 60 employees, making us large enough to provide our clients with a broad base of experience and resources, yet small enough to offer very personalized service—which we feel makes us stand apart from other CPA firms. In addition to the traditional services of Accounting, Tax Preparation, Audit and Business Consulting, MHC&S offers our clients specialized services including Estate Planning, Business Valuations, Cost Segregation Studies, Retirement Planning, QuickBooks Training, Financial Advisory Services, Fraud Detection and Deterrence, Business Succession Planning, Litigation Support and more.
MHC&S is a member of CPAmerica International, Inc., a national association of accounting firms offering membership to only 90 firms throughout the United States. This association offers a wide pool of additional technical expertise to the members firms, as well as continuing professional education necessary to maintain the degree of excellence which MHC&S feels is vital in today’s business environment.