Payroll news from the non-tax world
Tired of thinking about 2018 tax refunds? We are, at least for the moment. So let’s switch gears. Some steps taken by the Department of Labor and a federal trial court, which rebuked the Office of Management and Budget, may impact on your payroll operations.
Proposed salary level regs
Proposed regulations, which are slated to become effective next Jan. 1, would increase the guaranteed weekly salary employees must earn to retain their exempt status under the Fair Labor Standards Act to $679 a week ($35,308 a year), from the current $455 ($23,660 a year). While this is a 50% increase from the current level, it’s still way below $913 a week ($47,476 annually), which the Obama administration wanted in 2016 regulations. Those 2016 regulations never became effective.
No changes were made to the overtime duties tests.
The annual salary for highly compensated employees would increase to $147,414, from $100,000, $679 of which must be paid on a weekly basis. This is actually more than the 2016 increase (which was to have been $134,004 per year).
Similar to the 2016 regs, these proposed regs would allow you to count up to 10% of nonguaranteed payments (e.g., commissions, bonuses and other incentive payments) to non-highly compensated employees toward their guaranteed salary. The nonguaranteed payments could be paid as infrequently as annually. You would have to true up the payments if they fell short.
Downside: Unless their salaries are raised, more than one million employees who are currently exempt would qualify for overtime pay if these regs were to become final.
Although not included in the body of the proposed regs, the DOL, in the regs’ preamble, also proposes to reconsider the salary levels every four years through an additional notice and comment regulatory filing. But that’s not binding.
The regulations expected to be published in the Federal Register any day now. If you care to comment, you can direct electronic comments to www.regulations.gov. Be sure to identify your comments at Regulatory Information Number (RIN) 1235-AA20.
Not the end of the story: States have their own salary level requirements.
EEO-1 pay reporting is back
Late in the Obama administration, the EEOC made changes to the EEO-1 form, which is filed by private employers with at least 100 employees and government contractors with at least 50 employees. Filers were to report W-2, Box 1 data by tallying the total number of full and part-time employees on the payroll in each of 12 pay bands for each EEO-1 job category. Filers also had to tally and report the number of hours worked by all the employees accounted for in each pay band.
This reporting requirement was to begin with the 2018 EEO-1, which was due March 31, 2018. However, it never took effect, due to actions taken by the EEOC and the OMB. A lawsuit filed by the National Women’s Law Center against the OMB then challenged those actions.
A federal trial court recently ruled for the plaintiffs, the effect of which is to reinstate the W-2 reporting requirement.
As a result of the partial government shutdown in January, the EEO-1 reporting date has been extended to May 31.
Complications: It’s not known at this point what the OMB is going to do. It could appeal this decision. In addition, the EEOC’s reporting portal isn’t currently configured to accept W-2 data.