Issue link: http://viewer.e-digitaledition.com/i/709194
THE FAIR L ABOR STANDARDS ACT «FLSA¬ NE W OVERTIME RULES ARE SCHEDULED TO GO INTO EFFECT ON DECEMBER 1, 2016. THE NE W RULE UPDATES THE REGUL ATIONS FOR DE TERMINING WHE THER "WHITE COLL AR" SAL ARIED EMPLOYEES ARE E XEMPT FROM THE FLSA MINIMUM WAGE AND OVERTIME PAY PROTECTIONS. T O Q U A L I F Y FOR the exemp- tion an employee genera lly must be salaried, be paid more than a specific weekly salary level, which is $913 per week (the equivalent of $47,476 annu- ally for a full time worker), and primarily perform executive, administrative, or professional duties. Salaried employees that work more tha n 40 hours a week, perform some managerial duties and make less than $47,476 a year will now be entitled to overtime pay (@time and a half ). This will require employers to keep track of hours worked which they may not have done before. Employers need to determine how best to address this change. They should review their salaried employees to determine which employees may no longer qualify for the exemption and what the projected cost of overtime pay will be. By reviewing the mix of employees, assignments and hours worked they can determine if changes in the schedule and work assignments can help reduce the number of overtime hours. Employers who have employees who work overtime with base pay just under the new threshold may consider increas- ing the base pay to the threshold in order to qualify for the exemption and avoid paying overtime. Limiting work hours to 8 hours a day is a way to avoid paying overtime and it may be more cost e¥ective to hire additional employees and redistribute the work. Implementing a policy that prohibits employees from working over time is not enough. The employer will still be required to pay over time even if the employee works overtime in violation of your policy. Other disciplinary action may be taken against the employee. A nother solution is to decrea se the ba se pay of employees working over- time so that tota l pay stays the sa me. Note t hat employers may not reduce a n employee's hourly wa ge below the minimum wa ge but other w ise this is lega l. Note that the 2016 minimum wage rate in Ohio is $8.10 for employers with a nnua l g ross receipts of $297,000 or more a nd $7.25 if a nnua l gross receipts a re under $297,000. Another area to consider is the impact on employee benefits. Retirement plans could be impacted depending on the inclusion or exclusion of overtime pay in the plan's formula for employee contributions. If the plan includes over time pay the employer contribution could increase. Plans that exclude overtime pay could experience a bi a s t ow a rd h i g h ly compen sat ed employees resulting in possible nondis- crimination testing failures. Employers may be looking for ways to o¥set the additional cost of overtime a nd may cha n ge dent a l, v ision a nd disability coverage to employee pa id voluntary benefits. Roz Edwards, CPA, is a tax director with CBIZ/MHM LLC in Akron, Ohio. ■ BY ROSALIND M. EDWARDS, CPA 2016 Overtime Final Rule – What Changes Should You Consider in Wages and Benefits? M D N E W S . C O M /// M D N E W S C L E V E L A N D /A K R O N / C A N T O N n J U LY/A U G U S T 2 016 A C C O U N T I N G I S S U E S 1 9