September is Compliance Month at Bell Solutions!

EMPLOYEE COMPLIANCE

Overtime Rules Minimum Wage Rules Fair Labor Standards Act Worker Classifications

EMPLOYEE COMPLIANCE BASICS When it comes to worker classifications the Internal Revenue Service requires that contractors and employees be defined separately. Once you have defined who your 'employees' are, the Department of Labor and the Fair Labor Standards Act (FLSA) have requirements for the classifications, tracking, paying, and of those employees.

Staying Compliant

FLSA Employee Classifications Is important to define how your employees are classified as defined by the Fair Labor Standards Act (FLSA). FLSA states that employees must be designated as either nonexempt or exempt. Nonexempt employees are employees who not exempt from the law's requirements concerning minimum wage and overtime. In other words, you must ensure your employee is paid minimum wage and overtime (see below). Exempt employees are generally executives, managers, professional, administrative, or outside sales staff who are exempt from the minimum wage and overtime provisions. Exempt employees hold jobs that meet the standards and criteria established under the FLSA by the U.S. Department of Labor. (see below)

Minimum Wage Minimum wage is the lowest wage permitted by law that you can pay non-exempt workers. The Federal minimum wage for nonexempt employees is $7.25 per hour. The Nebraska minimum wage is $10.50 per hour. However, in November of 2022, voters passed the Nebraska Minimum Wage Statute Initiative, which raises the state's minimum wage annually through 2026. 12.00 per hour effective January 1, 2024 13.50 per hour effective January 1, 2025 15.00 per hour effective January 1, 2026 The minimum wage for employees who receive tips is $2.13 per hour. The amount of tips plus the $2.13 must reach at least $7.25 per hour. Read more

Overtime Rules The Fair Labor Standards Act (FLSA) states that employees must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. Read more

Salary (Exempt employee) Rules The FLSA allows for exemptions from overtime and minimum wage requirements for certain employees who work in administrative, professional, and executive jobs (known as "exempt" employees). To be considered "exempt," these employees must generally satisfy three tests: Salary-level test Effective January 1, 2020, employers must pay employees a salary of at least $684 per week. It is worth noting that the Federal Department of Labor has announced the release of its "proposed" rule to increase the minimum salary threshold to $1,059 per week ($55,068 per year) to be classified as exempt. The proposed rule will likely be published in October or November 2023, and then there will be a 60-day comment period. We will keep you posted as changes are released. Salary-basis test With very limited exceptions, the employer must pay employees their full salary in any week they perform work, regardless of the quality or quantity of the work. Duties test The employee's primary duties must meet certain criteria.

Company Job Classifications In addition to FSLA classifications it is recommended to establish company classifications for both nonexempt and exempt employees. For example: Regular full-time employees are not in a temporary status and are regularly scheduled to work the company's full-time schedule and are eligible for full benefits packages. Regular part-time employees are regularly scheduled to work less than the full-time schedule but at least [insert number of hours] each week. Regular part-time employees are eligible for some of the benefits offered by the company. Temporary part-time employees are hired as interim replacements to supplement the workforce and are temporarily scheduled to work less than the company's full-time schedule for a limited duration. Temporary part-time employees are not eligible for benefits.

Payroll periods To meet the rules related to paying your employees correctly requires you to establish the schedule around paying your employees. A pay period is a time frame used to calculate earned wages and determine when employees receive their paychecks. Pay periods are fixed and most often recurring on a weekly, bi-weekly, semi-monthly, or monthly basis. A work week is any consecutive seven-day period starting with the same calendar day and hour each week. A pay day is the per-defined day that an employee must be paid their wages.

Handbook / Equal pay policies  It is recommended to establish a handbook for your company to define all of your policies. Need help? Each fall Bell Solutions launches an annual small business handbook based on the most recent compliance. The 2023/2024 handbook will be available October 2023.

Need help? Utilize our Payroll Support Services Bell Solutions provides Payroll Support Services for QuickBooks Online Payroll users guaranteed to keep you compliant. See Terms of Service for more information.

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