Important Legislative Updates: Overtime Rules, WOTC, and more

Important Legislative Updates: Overtime Rules, WOTC, and more

Legislative changes that could impact your staffing company can be tough to keep track of, but we’ve been closely monitoring the changes to make sure you stay informed.

A couple months ago we talked about changes to FLSA Exemption Rules. It was looking like the window of opportunity to implement that change was closing, but then the DOL took action — resulting in changes possibly coming sooner rather than later. What does this mean for staffing companies? We’ll tell you.

There have also been changes to the Work Opportunity Tax Credit (WOTC), including an extension to the program and a new target group, which is great for business owners. Also, the Department of Labor’s Wage and Hour Division has been aggressive in their approach – and we have the numbers to prove it.

New FLSA Exemption Rules
Initially, the DOL wasn’t expected to publish new white collar exemption rules until “late 2016.” However, the DOL sent its final version of the new regulation to the White House Office of Management and Budget on Monday, March 14 for review. This is the final step before the DOL can publish and implement the new rule. The DOL is now looking to publish the new rules on July 1, 2016 – and some say this may be as early as April or May, with implementation 60 days after.

Only a few days later, on March 17, House and Senate Republicans introduced legislation aimed at stopping the DOL’s implementation of the new overtime rules. While legislators continue to debate whether or not the new rules should be in place, business owners need to be prepared in the event the new rules are implemented. You’ll need to start doing this now. In the event the new rules are put into place, 60 days does not give business owners a lot of time to determine what they’re going to do.

Start by looking at your exempt positions now and determine how many hours those employees work. That can help you decide if it’s better to reclassify them as non-exempt and track hours, as well as pay overtime, or if it’s better to raise their salaries to the new $51,000 annual threshold.

Remember, if the new rules are implemented, the minimum salary must be adjusted annually based on the 40th percentile of non-hourly paid employees. According to Lexology, once the new rules take effect, “this means that the bottom of the sample will effectively drop away, making the 40th percentile in the following years correspondingly higher.” They recommend assuming that the minimum salary will continue to rise, possibly by a significant amount, and plan accordingly.

Duties may also change, including looking at which duties an employee spends most of his or her time performing. Right now, there is no limit on the amount of time an employee can spend on non-exempt work. The DOL was taking comments on that practice and may consider moving to a model that California currently uses, wherein an exempt employee must spend at least 50% of their time on exempt work.

The best approach is to be prepared. While any changes may come with court challenges, it’s best to have your plan in place and ready to implement within the 60 day time period.

WOTC Updates
There is good news for business owners regarding changes to the Work Opportunity Tax Credit. The WOTC is a federal tax credit available to employers for hiring from certain target groups who have faced consistent barriers to employment. The maximum tax credit ranges from $1,200 to $9,600 depending on the employee hired.

One part of the good news is that the WOTC has been extended for five more years until December 31, 2019. In years past, the credit was extended retroactively, but employers can now plan for the credit through 2019.

The other part of the good news is that another target group was added to the list. Target groups currently include unemployed veterans (including disabled veterans), Temporary Assistance for Needy Families (TANF) Recipients, Food Stamp (SNAP) Recipients, Designated Community Residents living in Empowerment Zones or Rural Renewal Counties, Vocational Rehabilitation Referred Individuals, Ex-Felons, Supplemental Security Income Recipients, and Summer Youth Employees living in Empowerment Zones.

The target group list will now include Long-Term Unemployment Recipients. The IRS is allowing additional time to file Form 8850 to receive the tax credit. The standard 28-day deadline from the date of hire is extended to June 29, 2016 for Long-Term Unemployment Benefit Recipients hired between January 1, 2016 and May 31, 2016, and for all other individuals in target groups hired between January 1, 2015 and May 31, 2016.

Don’t miss out on your chance to receive this potentially valuable tax credit. For more information about the WOTC program, contact with Mary Jo Heim at 262-509-6214 or at

DOL’s Wage and Hour Division’s Aggressive Approach
The Department of Labor’s Wage and Hour Division is tasked with enforcing federal wage laws. According to their latest newsletter, they’re taking a more aggressive approach in doing so.

According to statistics reported in their newsletter and on their website:
•    1.7 million workers have been helped since 2009
•    $1.6 billion in back wages has been recovered since 2009
•    In 2015, WHD found over $246 million in back wages for more than 240,000 workers
•    79% of agency-initiated investigations uncovered violations in 2015, with an average of over $8,000 in back wages

For employers, this means that the Wage and Hour Division is actively investigating and pursuing wage-hour issues. To avoid being a part of these statistics, review your policies and practices (especially with regards to independent contractors and work performed off-the-clock) to ensure you’re compliant.

We’ll keep watching for additional updates – stay tuned for more legislative updates in our April e-newsletter, as well.