The USDOL finally gives us the updated Overtime Rule!

by Michael Haberman on September 25, 2019 · 0 comments

I am been saying it since 2016 that the US Department of Labor would be issuing new rules for who was to be paid overtime and who was not. Since the Obama administration’s attempt to update the overtime rules was killed in 2016 we have been waiting for the Trump Department of Labor to administer new rules. Well, they finally have given us the definition of who is to be eligible for overtime and who is not.

Press Release

In a press release dated September 24, 2019, the Wage and Hour Division announced the changes, which were different from what they had announced last spring. In this iteration, they announced the new wage level to be considered exempt was $684 per week. The announcement specifically said:

“…the Department is:

  • raising the “standard salary level” from the currently enforced level of $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker);
  • raising the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year;
  • allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices; and
  • revising the special salary levels for workers in U.S. territories and the motion picture industry.

More detail

In addition to the press release the Wage and Hour division also release an FAQ. Some of the details from this FAQ are:

Standard Salary Level

The Department is setting the standard salary level at $684 per week ($35,568 for a full-year worker). The salary amount accounts for wage growth since the 2004 rulemaking by using the most current data available at the time the Department drafted the final rule. The Department is updating the standard salary level set in 2004 by applying to current data the same method and long-standing calculations used to set that level in 2004—i.e., by looking at the 20th percentile of earnings of full-time salaried workers in the lowest-wage census region (then and now the South), and/or in the retail sector nationwide.

HCE Total Annual Compensation Requirement

The Department is setting the total annual compensation requirement for HCEs at $107,432 per year. This compensation level equals the earnings of the 80th percentile of full-time salaried workers nationally. To be exempt as an HCE, an employee must also receive at least the new standard salary amount of $684 per week on a salary or fee basis (without regard to the payment of nondiscretionary bonuses and incentive payments).

Special Salary Levels for Employees in U.S. Territories and Special Base Rate for the Motion Picture Producing Industry

The Department is maintaining a special salary level of $380 per week for American Samoa because minimum wage rates there have remained lower than the federal minimum wage. Additionally, the Department is setting a special salary level of $455 per week for employees in Puerto Rico, the U.S. Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands.

The Department also is maintaining a special “base rate” threshold for employees in the motion picture producing industry. Consistent with prior rulemakings, the Department is increasing the required base rate proportionally to the increase in the standard salary level test, resulting in a new base rate of $1,043 per week (or a proportionate amount based on the number of days worked).

Treatment of Nondiscretionary Bonuses and Incentive Payments

In the final rule, in recognition of evolving pay practices, the Department also permits employers to use nondiscretionary bonuses and incentive payments to satisfy up to 10 percent of the standard salary level. For employers to credit nondiscretionary bonuses and incentive payments toward a portion of the standard salary level test, they must make such payments on an annual or more frequent basis.

If an employee does not earn enough in nondiscretionary bonus or incentive payments in a given year (52-week period) to retain his or her exempt status, the Department permits the employer to make a “catch-up” payment within one pay period of the end of the 52-week period. This payment may be up to 10 percent of the total standard salary level for the preceding 52-week period. Any such catch-up payment will count only toward the prior year’s salary amount and not toward the salary amount in the year in which it is paid.

Updating

Experience has shown that fixed earning thresholds become substantially less effective over time. Additionally, lengthy delays between updates necessitate disruptively large increases when overdue updates finally occur. Accordingly, in the final rule, the Department reaffirms its intent to update the earnings thresholds more regularly in the future through notice-and-comment rulemaking.

What this means for employers

Just as it did in 2016, this salary revision sets a new level for an employee to be considered exempt from being paid overtime. It sets a starting point. As of January 1, 2020, an employee will have to be paid $35,568 per year to even be considered possibly exempt. Some employers will have to look at employees that make less than that and are currently classified as exempt. If it does not make financial sense to increase what they earn to the new level then they will have to be classified as nonexempt and will earn overtime every time they exceed 40 hours in a week. I covered much of this in The New Proposed FLSA Regulations and What They Mean for Employers. Ignore the stated money, but pay attention to the steps.

This is a big deal and will cause much stress and work for some employers. Others already pay above this level and will not have to make any adjustments.

It is prudent to remember that being exempt from overtime is not just a matter of being paid a salary. Nor is it a matter of the title the employee has. It is also dependent on the duties they perform. Those duties are found in Fact Sheet #17A:  Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the Fair Labor Standards Act (FLSA) and must be followed. Failure to do so will cost you a great deal of money.

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The Future of Payroll: 4 Trends to Watch: A Guest Post

by Michael Haberman on September 24, 2019 · 0 comments

Today’s blog post was written by Ashley Lipman.

The way the world does business is constantly evolving. From production methods to administration procedures, technological advancements have changed the face of business exponentially in recent years. One of the areas that’s adapting to these changes is payroll.

Payroll is a pain point for many business owners, regardless of the business size. Here are four trends to watch that will bring payroll into the future.

Multipurpose Systems

Businesses are revisiting the importance of having streamlined business solutions and implementing standard operating procedures. The more seamlessly the business operates, the more efficient and profitable it will become. Payroll operating systems are no exception.

Modern businesses are now looking for payroll systems that help handle HR tasks as well. HR Payroll Systems manage everything from employee onboarding to performance tracking and benefit usage. By having one of these integrative systems in place, businesses reduce friction caused by using different platforms and address multiple pain points with one investment. As payroll is one of those gray area tasks that fall under both the HR and accounting umbrella, having a multipurpose interface can create cohesion between departments.

AI and Automation

AI and smart technology are disrupting the business industry. It’s creating opportunities for small businesses to compete with large corporations for the first time in a long time. AI and automation are making it possible to accomplish a lot with a small team in place by handling repetitive tasks that are low-value but necessary for operations.

In payroll, AI and automation are handling many of the outdated processes, many small businesses still use. These systems make payroll submission as easy as confirming the information and clicking a button. Some systems are also able to analyze trends and forecast scheduling needs.

Payment Frequency Changes

Many businesses use a traditional bi-weekly or monthly payment model. This approach to payroll is changing, particularly as the gig economy becomes more prevalent, and instant payment is becoming more accessible. 

Modern payroll options are allowing for more flexibility in payment scheduling. Sure, it might make sense for business owners to process payroll on one specified day when they know it will take a lot of hands-on work. However, as systems become more streamlined, that approach is no longer necessary. 

Some systems promote one-time payments, which are perfect for independent contractors, while others provide instant access to funds. This means that an employee who has a surprise bill come up between paydays could be able to get the money they need without going into debt.

Banks Not Required

Technology isn’t just changing payroll; it’s changing banking as a whole. In the near future, it’s possible that traditional bank accounts will become obsolete. Why pay a service fee to store your money with a bank when you can use PayPal or Apple Pay?

In the future of payroll, there will be a shift away from traditional banking methods and toward services like PayPal. Taxation laws have already started to change to be sure to capture money moving through these channels. 

At present, having a home address and a bank account is necessary to get a job. As more people move toward remote work— many of whom pursue their love of a nomadic lifestyle while doing so– more businesses will start to accept “bankless” employees and be more flexible in their payment methods.

The Future of Payroll

With so many changes afoot, modern businesses will have to stay ahead of the curve to be competitive. Attracting top talent means offering solutions that fit their lifestyle. Furthermore, these changes necessitate improved employer focus on topics like financial literacy and debt management when talking to employees about their options.

With the right changes in processes, technology, and company culture, modern businesses can prepare for a brighter tomorrow.

Ashley Lipman is a super-connector who helps businesses find their audience online through outreach, partnerships, and networking. She frequently writes about the latest advancements in digital marketing and focuses her efforts on developing customized blogger outreach plans depending on the industry and competition.

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Cultural Fit be Damned! Hire the Whacko!: Revisited.

by Michael Haberman on September 23, 2019 · 3 comments


There is an article in the Wall Street Journal that says “employers should be aware of the dangers of hiring for cultural fit.” There are dangers of hiring everyone to fit into the culture. It makes the company homogeneous and that costs in creativity and innovation. Sometimes you have to ignore the fit and that reminded me of this post from 2014. 

Don't ignore the outlier hire.

Don’t ignore the outlier hire.

We have all known someone who didn’t fit in. Perhaps you were the one that didn’t fit in. Do people that don’t fit in ever find a place? Not always. But sometimes they start their own companies. And sometimes a company does find a place for them.

Innovation is the key to success for many companies today. But to be innovative you have to have someone that looks at the world slightly different, or really different, than the majority of the others. “Fit” does not usually produce new ideas.

If you are struggling think about hiring a disruptor. Someone who will come in an unsettle things. I don’t mean by being abusive or anything like that, rather they will come in and ask “why?” or “why not?” They will challenge assumptions. They may challenge authority. They will have crazy ideas. They will have crazy points of view. You will know you have been successful when everyone thinks you are crazy for hiring this person.

Here is a story of a company that hired way outside the bounds of the usual “fit.” The Case for Hiring “Outlier” Employees makes a very good case for why you look for different in order to stop being ordinary.


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This is reprinted with permission from AllClear ID.

If you are thinking about adding employer-paid identity protection to your benefits package, you may have questions about the value such a benefit brings to both your employees and your business.

As a benefits manager, you’re responsible for vetting an array of options to find benefits that provide the perfect mix of utility, necessity, and affordability. Our FAQ reflects routinely asked questions and concerns we hear from benefits managers and sheds light on how identity protection benefits can bring value to your organization.

Q: What are identity protection benefits and why should my business care?

A: Identity protection benefits help to prevent and mitigate the impact of identity theft on your employees at work. Just like a health benefit protects employee wellness and keeps them on the job, an identity protection benefit protects employees’ financial wellness by sending alerts when a thief tries to open fraudulent accounts and can stop most identity theft before it starts. Because the rates of identity theft and fraud are so high — 1 in 20 Americans will be victims this year — more and more companies are adding employer-paid benefits to protect against the resulting loss in worker productivity.

Q: What’s the difference between ID theft prevention and repair?

Some plans are only focused on preventing identity theft, while others are focused on identity repair. Some plans offer both. Prevention includes services such as credit monitoring and fraud alerts to stop a theft or fraud before it can start. Should the worst happen, covered employees with a repair benefit are a phone call away from a fraud investigation team that works to resolve their case from beginning to end.

At a minimum, employers should purchase ID repair as it requires virtually no upfront work and is very affordable. ID theft protection, however, offers better overall financial protection for employees.

Q: My company already offers employee-paid identity protection benefits. Why should I consider employer-paid coverage?

A: Some plans are offered as a voluntary, employee-paid benefit. This leads to low enrollment by employees, which makes it a hassle for you to manage while making it unlikely that the employee is actually protected when identity theft strikes. An employer-paid plan means all employees are covered automatically, increasing engagement and value to your employees while protecting you from any loss of productivity.

Q: I don’t have the bandwidth to juggle a time-consuming implementation or to educate employees on the service and enrollment process. What support can I expect?

A: Identity protection benefits should integrate easily with your existing benefits platform, and require no additional heavy lifting from you. Using a 1-800 number specific to your organization, employees can quickly and easily opt-in. Look for a provider that offers monthly reports on employee usage and ROI, and can serve as your partner in all things related to identity protection, including content on latest trends in identity theft and updates on where identities may be exposed from the latest breaches.

Q: If one of my covered employees experiences a fraud incident, what does the resolution process look like?

A: When an employee suffers from identity theft, the last thing they or you want to do is jump through hoops to start getting help. An identity protection benefit provides employees with a direct line of communication to a licensed fraud investigation team. The investigator then eliminates as much of the manual effort and stress from the victim as possible and works to return the victim’s identity to its pre-fraud state. Often, a single phone call is all it takes.

Q: How do I justify the investment?

A: All it takes is for a couple of employees to utilize the benefit for your business to achieve a complete return on your investment. For an executive or high-billing employee, lost productivity can add up to thousands of dollars in lost revenue, while for rank-and-file employees lost productivity can impact your operations, customer service, and product quality. If your goal is to keep employees on the clock instead of spending their working hours cleaning up a financial mess then identity protection benefits are a smart investment.

Q: My company recognizes the value of employee financial security benefits to the productivity and performance of our team. Why should we add ID protection benefits to our current financial wellness package?

A: Employer-sponsored financial wellness programs provide employees with the tools they need to be educated about their financial situation and to help them develop the skills and habits that lead to financial security. This ensures that employees are secure and focused on their jobs. But what good is getting your financial life in order if it can all be ruined through identity theft? A financial wellness benefits program is incomplete unless it also includes a benefit to protect the financial security tools you have implemented.

Q: If employee information is compromised in a workplace identity breach, will providing ID benefits protect my business?

A: If an employee’s identity theft takes place due to a workplace incident, having an identity protection benefit in place can help employees get back on track faster while showing that you made an effort to proactively mitigate damage. This can help reduce the chances you’ll be found negligent in the case of a lawsuit or exposed to massive fines.

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A Lesson in Safety Learned from Acts of Terror: Revisited

by Michael Haberman September 11, 2019

Tweet I am reposting this post which was originally posted on September 12 2011. Since today is another anniversary of the terror attack on New York I wanted to republish it. The safety lesson I learned  is still as relevant. Perhaps through this lesson learned you too will be able to save a life someday. […]

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6 Ways to Gain More Attention for Your Business

by Michael Haberman September 9, 2019

Tweet This post was written by Keith Coppersmith. Keith is a business and marketing expert who has experienced both the rise and fall of many businesses. He enjoys writing and providing insight of the marketing industry based on both practice and theory. To misquote Tolstoy: “All successful companies are successful in the same way”. But […]

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5 Reasons Why Your Employees Need an Employer-Paid Identity Theft Protection Benefits

by Michael Haberman September 6, 2019

Tweet This was originally posted on the website of AllClearID. I met this company at #SHRM19 in Las Vegas this past June. I liked their company and I liked their product. They have given me permission to repost this blog. The surge in the number of Americans impacted by identity theft each year—at last count, […]

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How to measure and improve your workplace culture

by Michael Haberman September 5, 2019

Tweet This guest post was written by Anna Hayes of Joinblink.com All too often, senior management read “improving workplace culture” as “offering some lunchtime yoga and putting on some free food every now and then”. It’s not that there’s anything inherently bad with either of these two things (free food is a cornerstone of good […]

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Wow! Where has the time gone?

by Michael Haberman August 30, 2019

Tweet My blog, HR Observations, begins its 15th year. I cannot believe I have been writing this blog for 15 years. What started out as an attempt to have a voice as a lonely HR consultant has given me national and international recognition. I am not famous or well-known by any means, but it has […]

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Leverage Surveys to Better Select Virtual Teams

by Michael Haberman August 26, 2019

Tweet This guest post was written by Angela White, her bio is below. In this post, she offers some excellent advice on putting together virtual teams. Businesses are widespread when it comes to the areas they operate, sectors they cater to, and geographic regions they work in. Managing a large workforce in a single area […]

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