Archive for the ‘Compensation Laws’ Category



Major Changes to Overtime Pay on the Horizon

On March 7, the U.S. Department of Labor (DOL) announced proposed changes to the Fair Labor Standards Act (FLSA) regulations that will likely make approximately 1 million workers eligible for overtime pay.

Overtime Paycheck

Under the FLSA, employers must pay workers time-and-a-half for hours worked in excess of 40 hours in a work week. The FLSA includes some exemptions to the overtime rules, intended to exclude certain “white-collar” workers from the overtime requirements. Companies do not have to pay an employee overtime wages as long as the worker passes both the salary test and the duties test to meet the FLSA exemptions from overtime pay.

The rule would increase the salary threshold that an employee performing executive, administrative or professional duties must be paid in order to be exempt from payment of overtime for hours worked in excess of 40 per week. Currently, employees performing duties in a white collar exemption category that make $455 per week ($23,660 annually) or less must be paid an overtime wage, whereas the new rule would make the required wage of $679 per week ($35,308 annually).

The rule, if it becomes final, will go into effect on January 1, 2020. It was published in the Federal Register on March 12, upon which began a 60-day period for the public to submit comments. The DOL already received public input in six nationwide listening sessions, as well as 200,000 comments after a 2017 Request for Information while it was developing the proposal.

The nearly unanimous public opinion, according to the DOL, was that the overtime threshold needed to be updated from the current level established in 2004. The Obama administration proposed a rule in 2016 that would have doubled the salary threshold and set up automatic adjustments to it, but a U.S. District Court found the rule unlawful. The new proposal, however, would set up periodic reviews to determine if the salary threshold increases are needed.

Additionally, the rule would increase the compensation requirement for someone to be classified as a highly compensated employee (HCE) – and therefore exempt from overtime wages – from $100,000 to $147,414, which is equivalent to the 90th percentile earnings of full-time salaried workers, projected to Jan. 1, 2020. Along with the income, HCEs must also have primary duties that include office work or non-manual labor, and they customarily and regularly perform duties of an exempt executive, administrative or professional employee.

Employers should carefully review their current exempt employees’ compensation structure to determine which workers may be eligible for overtime wages under the new regulations.  Although the changes are not effective until next year, companies should monitor those employees’ work hours now to determine the most cost-effective way to comply with the new rules. In some cases, it may be easier to simply raise the workers’ salaries to the threshold, assuming their job functions meet the FLSA duties test.  In other cases, employers may want to convert the employee to an hourly rate and pay overtime for hours worked in excess of forty hours per week and implement rules to limit excessive overtime.

For more information about the new overtime regulations, contact employment attorney Elaina Smiley at es@muslaw.com or 412-456-2821.

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Category: Compensation Laws


PPACA’s Effects on Insurance Agencies

The new health care reform act is affecting many different industries and businesses, from the amount of health care coverage provided for employees, to the way businesses report the costs associated in their employees’ compensation packages. With so many changes set to occur in the next several years, the industry that will perhaps be most impacted by the new legislature is the insurance agency industry.

PPACA's Effects on Insurance Agencies

So, the question is, when the Patient Protection and Affordable Care Act (PPACA) opens up buying pools to individuals, will insurance agencies lose out on this business and have to consolidate or downsize, or will they begin to offer different services? Will small business clients of insurance agencies give up their insurance plans and leave it to employees to manage their own health care plans, or will insurance agencies step up their efforts, in either marketing their product or providing new additional solutions within their industry space?

These are questions many insurance agencies are asking themselves. As insurance agencies rely on COMPackage Total Benefit Statements to prepare compensation reports for their clients, Joe Blattner, Founder and President of COMPackage, decided to ask some of his customers this very question. Here’s one very thoughtful response from one client worth sharing with you here:

Patrick Paule, Employee Benefits Advisor for OneSource Benefits Solutions and author of Benefits Guy Blog, how his company plans on altering its business in the face of healthcare reform. Below is Mr. Paule’s thoughtful and exemplary reply:

“PPACA is an evolving monstrosity filled with complexities beyond any health professional’s wildest dreams. Between now and 2014 we will undergo a change that is so big in scope that even those who wrote the bill can not comprehend.

It is very clear that the main focus of the legislation isn’t reforming our health care system, but rather reforming our health insurance delivery system. All of the changes that have been implemented to date have dealt with access to insurance products, enhancement of insurance benefits, and regulation of insurance markets.

Two major pieces of the legislation will have significant impact on compensation paid to agencies and independent agents. The Minimum Loss Ratio requirement is already in effect and has caused insurance companies to reduce commissions especially in the individual and small group markets. Under the requirements insurers must now spend 80% (85% for groups over 100 employees) of all premiums on medical claims. Anything below this number must be rebated to the clients. In the past our compensation had been viewed as a pass through. Now it is considered part of the administrative costs. The second piece is a work in progress and must be ready to operate on January 1, 2014. An online marketplace known as a Health Insurance Exchange must be created to allow people to purchase insurance. The key to this exchange is that the only way an individual can qualify for subsidized insurance is if they purchase through the exchange. The compensation that may be paid to agents for selling these products hasn’t been established, but based off of how the high risk pools are being run the amount is nominal.

Other items, such as the guaranteed issue of insurance regardless of medical conditions, in the legislation will make it easier for small employers to discontinue their plans and push employees into purchasing on their own. They will look to do this because they can avoid the added administrative expenses they will incur in order to keep a plan in compliance. Not to mention it will eliminate a costly expense.

Insurance agencies are going to have to adjust in order to survive. The way we are planning to survive is by leading the charge into a world where we can serve as a consultant. In our new role we will aid in human resource consulting, payroll services, third party administration, long term benefits planning, and compensation practices. We must provide more value and give clients tools such as COMPackage that enhance our position. As I tell my clients, as head coach you are important to the success of a team. As your point guard I will follow your lead and help create a program of championship caliber.”

How is your insurance agency thinking of handling the changes? What plans have you already set in place to combat the changes? Would love to hear your thoughts in the comments below!

Am I Required By Law to Offer Employee Benefits?

Many employers are confused about which benefits they’re required to offer to their employees. Do employers have to provide a certain amount paid leave to their employees? What about insurance? While regulations vary from state to state, the following are benefits employers are absolutely required to offer:

Minimum Wage Law
Federal minimum wage is $7.25 per hour; however, different states have different requirements. Remember that when different state and federal wage requirements are present, the higher one always applies. Find your state’s minimum wage here.

Social Security Taxes
Employers are required to match the amount each employee pays to Social Security. Make sure you’re compliant with all rules by reading Social Security’s online guide for employers.

Overtime
Employers with hourly workers are required to pay them time and a half for every hour over 40 hours per week.

Those are really the only three things every business in the country is required to offer. However, there are other requirements that come apply only to certain businesses. For example, companies with more than 50 employees are required to provide 12 weeks of unpaid leave to someone who has a serious medical condition, must care for someone with a serious medical condition or just had a baby.

Business.gov has more information about which benefits your business is obligated to provide.

Since you’re not required to offer benefits, like paid time off, health insurance and retirement, it is in your best interest to show your employees how much these benefits are adding to their total compensation.

Learn more about how you can create comprehensive in a matter of minutes with COMPackage.

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Category: Compensation Laws, Employee Benefits