Archive for the ‘Department of Labor’ Tag

Minimum Wage Increases in 2013

wagesAlthough the Federal minimum wage will remain at $7.25 in 2013, the minimum wage in the followings States will increase for tipped and non-tipped employees, effective January 1st.   

According to the Fair Labor Standards Act (FLSA), employers in States with both Federal and State minimum wage laws must pay the higher minimum wage rate. Information related to minimum wage rate increases can be found on the Department of Labor’s (DOL) website: http://www.dol.gov/whd/minwage/america.htm, Federal Wage and Labor Law Institute (FWLLI) or through BNA – the Bureau of National Affairs, Inc. Employers can also access: http://www.dol.gov/whd/state/tipped.htm for resources related to tipped employees.

*The DOL will produce updated minimum wage tables approximately two to four weeks after the increases become effective in the respective states.

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The New 401(k) Fee Disclosure Rules: From A Small Business Perspective

As of July 1st 2012, the Department of Labor (DOL) requires service providers to disclose all direct and indirect fees associated with the management of 401 (K) retirement plans. The DOL’s intent for the implementation of the fee disclosure rules is to provide investors (employees) with a breakdown of fees as well as to encourage employers who sponsor these plans to “shop” around for service providers and compare costs.

The Employee Benefits Security Administration (EBSA, a division of the DOL responsible for overseeing protection of employee rights regarding pension plans) first proposed the new disclosure rules as part of the Employee Retirement Income Security Act (ERISA). The EBSA recognized the need for transparency of fees and expenses in employer-sponsored 401 (k) plans following the recession and decline in retirement investment in 2010. Efforts to make fees and expenses transparent heightened after a series of class-action lawsuits were filed against large employers, alleging violation of fiduciary duties for undisclosed fees and excessive charges. As a result, the DOL enacted the new disclosure rules in April 2012, but decided to postpone the implementation date to July 2012 to allow service providers time to seek compliance.

Service providers must furnish documentation on:

  • Administrative fees and expenses;
  • Individual fees and expenses;
  • Performance data;
  • Comparison of each investment product available; and
  • Deducted fees and expenses in a dollar amount.

Investors will receive an initial disclosure detailing their investment, record-keeping expenses, and other fees deducted from their 401(k) plan by August 30, 2012 and can anticipate receiving the first quarterly statement listing fees by November 14, 2012.

What does this Mean for Small Business Employers?

 Since the new disclosure rules expose deducted fees and miscellaneous expenses, employers will have the resources they need to evaluate the price of their plans and they can “shop” around for the best service providers. According to Cerulli Associates, there are approximately 500,000 small and mid-size businesses that offer a 401(k) plan. About 10% of the businesses with fewer than 100 employees have a plan and 99% of companies with greater than 50 employees have a plan.  In general, small to midsize employer plans receive less attractive pricing in comparison to large company plans. The new disclosure rules allow employers to view the exact cost of the plan so that they may compare plan options.

 401(k) Fee Disclosure Rules Resource:

http://www.dol.gov/ebsa/newsroom/fsparticipantfeerule.html

Revised Expiration Date of the FMLA Certification Forms

As of December 31 2011, the Family and Medical Leave Act (FMLA) Certification forms expired, leaving many employers wondering what forms to use in attempts to remain in compliance and when a new form will be released. The Department of Labor (DOL) announced that the outdated forms could still be used although these forms lack mention of important regulations, including 2010 Amendments for Military Family Leave and the Genetic Information Nondiscrimination Act of 2008 (GINA).

At the beginning of 2012, the DOL released the forms with a temporary expiration date on a monthly basis. The delay in the revision date was due to a review of the forms by the Office of Management and Budget (OMB). Under the Paperwork Reduction Act of 1995, the DOL is required to submit FMLA forms to OMB for approval. The form was initially approved in late 2008 and carried a three (3) year expiration date, the maximum time frame allowed.

 Recently, the forms were released with an expiration date of February 28 2015, but the new forms do not include any substantive changes (view updated forms below). The DOL did not use this opportunity to update the shortcomings of the expired forms.

The U.S. Equal Employment Opportunity Commission (EEOC) recommends employers include language pertaining to GINA in a customized version of the form. GINA requires employers who request medical certifications from employees to safeguard against the collection of any genetic information about the individual.

 The Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits employers and other entities covered by GINA Title II from requesting or requiring genetic information of an individual or family member of the individual, except as specifically allowed by this law. To comply with this law, we are asking that you not provide any genetic information when responding to this request for medical information. “Genetic information,” as defined by GINA, includes an individual’s family medical history, the results of an individual’s or family member’s genetic tests, the fact that an individual or an individual’s family member sought or received genetic services, and genetic information of a fetus carried by an individual or an individual’s family member or an embryo lawfully held by an individual or family member receiving assistive reproductive services.

Calculating Overtime Pay

Many employers find it difficult to accurately calculate overtime due to complex calculations  and changing regulations. The burden falls on the employer to properly classify an employee (as exempt or non-exempt) and provide compensation in compliance with the Fair Labor Standards Act (FLSA). According to the Wage and Hour Division of the Department of Labor, employers were fined $3.1 million in penalties for FLSA violations in 2008 and more than 197,000 employees received a total of $140.2 million in lawsuits regarding minimum wage and overtime back wages. The growth in employee lawsuits can also be observed in 2010; the number of FLSA lawsuits filed in federal courts in the second quarter of 2010 were 22 percent higher than in the first quarter of 2010.

Exempt vs. Non-Exempt

As determined by the FLSA, employees are placed in an either the exempt or the non-exempt category based on the employee’s job duties and responsibilities. The exemption refers to an employee’s eligibility to be paid overtime for hours worked over 40 in a workweek. If an employee is in the non-exempt category, the employee must be paid overtime, which is an additional one-half of an employee’s regular rate of pay for all hours worked over 40 in a workweek. Some states may have different and more stringent guidelines.

To help avoid penalties involved in calculating overtime, the FLSA recommends compliance with three key guidelines:(1) identify an employee’s regular rate of pay; (2) determine what activities count as hours worked; and (3) apply the FLSA definition of a workweek. Employers are encouraged to comply with these guidelines and retain documentation of compliance to serve as a good faith effort during a Department of Labor (DOL) audit.

Determine What Counts as Hour Worked

Hours worked include the entire time an employee is on duty, on company gorunds or at any other prescribed place of work. The time the employee is “permitted” to work as well as time the employee voluntarily stays late to finish work or comes in early counts as hours worked.

Apply the FLSA Definition of a Workweek

FLSA defines a workweek as a fixed and regularly recurring period of 168 hours, or seven consecutive 24-hour periods. The workweek can begin on any day of the week and at any hour of the day. The frequency of an employee’s pay (i.e. bi-weekly, semi-monthly, monthly) has no impact on determining the fixed workweek. When calculating overtime payment, each workweek must be analyzed individually; two or more workweeks cannot be combined. The workweek is determined by the employee’s start and stop times which remain fixed regardless of the hours the employee is scheduled to work. However, the start and stop times can be changed, as long as the change is intended to be permanent and complies with overtime requirements.

Identify an Employee’s Regular Rate of Pay     

An employee’s regular rate of pay is the weighted average of the employee’s hourly rate. To calculate calculate the rate of pay, divide the total pay for employment in a workweek by the total number of hours actually worked. Total pay is all payments made to or on behalf of the employee including shift differential, non-discretionary bonuses, promotional bonuses and cost-of-living adjustments. Payments made in the form of goods or facilities customarily provided by the employer are also included. For example, if an employee’s wages include lodging, the reasonable cost or the fair value of that lodging is added to the employee’s earning before determining his/her regular rate. However, deductions for board, lodging or similar facilities do not affect the regular rate of pay calculation; thus the calculation should be made before the deductions are made.

Statutory Exclusions

As per the FLSA, certain payments are excluded from the regular rate of pay. These exclusions include:

  • Payment for gifts for holidays, special occasions, or as a reward for service;
  • Payment made for occasional periods when no work is performed due to vacation, holiday, or failure of the employer to provide sufficient work;
  • Premium payments for overtime, or for working on weekends and holidays; and
  • Benefits for life insurance and health insurance.

 Four Steps to Calculating Total Weekly Compensation

  • Step 1: Regular Pay= Total Pay for Workweek + Additional Compensation – Exclusions
  • Step 2: Regular rate of Pay= Regular Pay divided by Total Hours Worked
  • Step 3: Premium Pay for Overtime= Regular Rate of Pay multiplied by 0.5, multiplied by (Total Hours Worked – 40)
  • Step 4: Total Weekly Compensation= Total Pay for Workweek + Premium Pay for Overtime

Companies should review their compensation and incentive practices to ensure compliance with all applicable Wage & Hour laws to avoid problems or investigations by the DOL. For more information, please visit the DOL’s website: www.dol.gov.

New Poster Requirements for 2012

Employers, are you prepared for 2012? During 2011, the Department of Labor (DOL) introduced several new poster requirements effective January 1, 2012. Additionally, several states issued legislation altering state posters pertaining to benefits, minimum wage and safety regulations.

 Workplace posters  inform employees and employers of their rights and responsibilities. Employers must post mandatory workplace posters in areas clearly visible to the majority of their employees (i.e., break rooms, hallway, and entrances/exits).

 

Federal

  • NLRB- Employee’s Right to Unionize  (effective April 30, 2012 *Second delay in implementation*)

State

All state posters listed below must be updated by January 1, 2012. 

  • Arizona – Minimum Wage and ADOSH (Safety and Health)
  • California: San Francisco – Minimum Wage
  • Colorado – Minimum Wage
  • Connecticut – Paid Sick Leave
  • Florida – Minimum Wage
  • Illinois –  Workers’ Compensation
  • Montana – Minimum Wage 
  • Maine –  Child Labor notice and Minimum Wage
  • New Jersey – Recordkeeping Obligations for wages, benefits, and taxes
  • New Hampshire – Minimum Wage
  • Nevada – Fair Employment and Discrimination Notice
  • Oklahoma – Workers’ Compensation
  • Ohio – Minimum Wage
  • Oregon – Minimum Wage and FMLA
  • Utah – Unemployment Insurance
  • Vermont – Minimum Wage
  • Washington – Minimum Wage