Regulations Finally Issued

Regulations Finally Issued

By Bodman’s Workplace Law Practice

tax-exempt-jun16

After years of anticipation, on May 18, 2016, the United States Department of Labor (DOL) issued Final Regulations changing the minimum salary requirements for exempt salaried executive, administrative, professional, and computer employees. This is the first change in DOL Regulations since 2004 when the minimum exempt salary requirement increased from $250 per week to the current $455 per week. The goal of these new Final Regulations is (1) to allow more employees who are currently exempt – and do not receive overtime pay – to be paid overtime (one and one-half times an employee’s regular rate of pay for all hours after 40 hours of work in a workweek) and (2) to raise the pay of many employees that the employer wishes to maintain as exempt. Employers will be forced to make tough payroll decisions regarding who will remain exempt and how to compensate the newly non-exempt employees.

Employees must still meet the existing “duties” test applicable to an executive, administrative, professional, or computer employees. Under the Final Regulations, beginning on December 1, 2016, the minimum amount an employer must pay an exempt salaried employee increases:

  • To $913 per week (annually $47,476) for exempt executive, administrative, and professional employees.
  • To $134,004 per year for highly compensated employees, which also must include at least $913 per week paid on a salary or fee basis, as defined by the DOL Regulations.
  • To $913 per week (annually $47,476) for highly skilled exempt computer employees. These highly skilled computer employees may also be exempt if paid hourly at a minimum of $27.63 per hour (annually $57,470.40), which is unchanged from the current Regulations.

The salary levels will be indexed, with the minimum salary
level evaluated every three years beginning January 1, 2020, effectively guarantying raises for employees at or near the minimum salary level. No changes were made to the outside salesperson category or to the “duties” tests for the executive, administrative, professional and computer exemptions.

One element of the new Rule may benefit employers. Up to 10% of the exempt employee’s salary may be satisfied by the payment of “nondiscretionary bonuses, incentives, and commissions that are paid quarterly or more frequently. If by the last pay period of the quarter, the sum of the employee’s weekly salary plus nondiscretionary bonus, incentive, and commission payments received does not equal 13 times the [required] weekly salary,” the Final Regulations allow for a “catch-up” payment to meet the minimum requirements.

It is incumbent on all employers to remember that a salary under the DOL Regulations is more than just a “salary.” The Regulations define a “salary” as a predetermined amount of compensation paid each pay period with no reduction of pay because of variations of quality or quantity of an employee’s work. A bona fide sick pay policy is required. Deductions from “salary” are limited to those allowed by the DOL Regulations. Employers will be required to take action to meet these new challenges. To be ready for December 1, 2016 and beyond:

  1. Identify current exempt employees and their salaries;
  2. Determine the actual weekly hours that current exempt
    employees work and their projected future hours over 40 in a
    week after December 1, 2016;
  3. Determine which exempt employees currently earning
    less than $913 per week will be kept exempt and receive pay
    increases;
  4. Confirm that the DOL’s non-monetary salary requirements
    are met for the exempt employees;
  5. Ensure that the exempt employees meet the applicable
    “duties” test;
  6. Develop pay plans for the former exempt

Bodman can provide guidance on the new regulations and help your company meet compliance deadlines on
time and in a way it makes most sense for your organization. Contact Workplace Law Practice Group Leader
Maureen Rouse-Ayoub, client alert author Donald H. Scharg, one of the lawyers from the Workplace Law Group,
or your go-to Bodman attorney for more information.

Maureen Rouse-Ayoub
Chair, Workplace Law
Tel: 313-392-1058
Email: mrouse-ayoub@bodmanlaw.com

Donald H. Scharg
Member, Workplace Law
Tel: 248-743-6024
Email: dscharg@bodmanlaw.com

Baseball & Printing

Financial Ratio Analysis

by Stuart W. Margolis, CPA,MT • ( Philadelphia Phillies Fan!)

baseball-printingFor most of us, ratios are not something we think of every day, at least not until springtime and the onset of baseball season. If you want to compare two Major League home-run hitters, you are likely to compare their batting averages. If one is hitting .389 and the other’s average is .236, you immediately know which is doing better, even if you don’t know precisely how a batting average is calculated. When applied to business, think of ratios as “batting averages for business”. In baseball or in business most ratios measure some form of productivity. They generally give an indication of how one result varied in relation to another. Ratios are a tool to make it easier to do an “apples to apples” comparison.

In fact, the classic batting average statistic is:

The number of hits made by the batter, divided by the number of times the player was at bat. (For baseball enthusiasts, those are “official at-bats,” which is total appearances at the plate minus walks, sacrifice plays and any time the player was hit by a pitch.)

The batting average is thought of as a measure of a baseball player’s productivity; it is the ratio of hits made to the total opportunities to make a hit.

Hits at Bats

Other baseball ratios include Earned Run Averages, Average Pitching Strikes to Ball Ratio and more. For some reason, they all make sense to us. Avid fans can visually see each pitch, strike out and hit so they have a general idea of how players and team are performing.

In business, it is more difficult to “see” productivity, especially productivity as compared to the competition. After all, we don’t line up and engage a competitor in an open field for the whole world to see. It makes monitoring ratios all the more critical.

There are many ratios you can use to monitor productivity verses the competition. They all measure how good a job your company is doing using its assets, generating profits from each dollar of sales, turning over inventory, or whatever aspect of your company’s operation you are evaluating.

For your business, ratios are nothing more than simple comparisons between specific pieces of information pulled from your company’s balance sheet and income statement. You can use ratio analysis to examine the current performance of your company in comparison to past periods of time, from the prior quarter to years ago. Frequently, this can help you identify problems that need to be fixed. Even better, it can direct your attention to potential problems that can be avoided.

In addition, you can use ratios to compare the performance of your company against that of your competitors or other members of your industry.

Remember the ratios you will be calculating are intended simply to show broad trends and thus to help you with your decision-making. They need only to be accurate enough to be useful to you. Don’t get bogged down calculating ratios to more than one or two decimal places.

General trends and striking disparities are important to watch. There could be good reason for the disparities, but understanding them, understanding why they exist and how they impact your pricing and bottom line profit can make all the difference in the world to estimating, sales pricing, sales pitch delivery, future purchasing and more.

Our example firm resulted in a factor of 1.87 and fell into the “Could be a chance of the company heading towards bankruptcy within 2 years of operations from the date of financial figures given.” In reality, they fell towards the bottom range of this category. This particular company was sold, instead of moving into bankruptcy, almost 2 years after these results received!

In recent years, we’ve helped companies with less than favorable Z-Scores turn around and thrive. If you are in trouble call and get help.

Just like baseball General Managers use ratios to decide who to sign for a season, banks and investors use financial ratios as a method to decide who is worthy to sign too. Knowing your “stats” ahead of time will help your position if evaluated. Can you imagine a baseball General Manager drafting a player who is unsure of his batting average?

An annual glance at the competition is worth the time. In print and packaging, Printing Industries of America (PIA) has an Annual Financial Ratios Study that’s free to members of the association and members of PIA’s affiliated groups. (survey sea- son extends through May). Membership to PIA and affiliated groups is “corporate”, so find out if your company’s a member and participate. Non-members can participate for a fee. If you don’t feel like filling out a survey, contact me. We will complete it for you. To make it really easy, you can even order a Customized Financial Report. It shows your actual numbers verses the competition. It’s worth it especially if the GM of the competition has this information. Now go out there and play ball!

Health Insurance

Health Insurance

BCBSM has individual health insurance plans available to PIM members. Association Benefits Company, an authorized independent agency with Blue Cross Blue Shield of Michigan, is here to help you take care of your families and your employees. Call them today to discuss the individual and group options available to you. They work with all agents!

Description for Individual Coverage:

Introducing MyBlueSM– Individual Coverage direct with BCBSM

Printing Industries of Michigan now offers new BCBSM health care plans for individuals and families at all stages of life. Whether you’re single, a recent college graduate, self-employed, starting a family, or considering early retirement, BCBSM has a plan to meet your needs and budget. Click here for eligibility, review plan options and to enroll on line!

Description for Group Coverage:

Employers providing health insurance for employees

Printing Industries of Michigan now offers new BCBSM health care plans for individuals and families at all stages of life. Whether you’re single, a recent college graduate, self-employed, starting a family, or considering early retirement, BCBSM has a plan to meet your needs and budget. Click here to get started with our BCBSM/BCN Administrator!

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