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  • The Raise the Wage Act of 2023, aiming to incrementally raise the federal minimum wage to $17 an hour by July 2029, has stirred an argumentative debate. The Congressional Budget Office (CBO) study highlights its potential to positively impact over 18 million workers but also forecasts potential job displacement for around 700,000 Americans.

    What Are The Impacts?

    Positive wage impact

    The CBO’s findings emphasize the potential for substantial wage hikes for workers currently earning at or slightly above minimum wage levels. This move could significantly improve the economic situation for many individuals, lifting around 400,000 workers out of poverty. In addition, an analysis by the Economic Policy Institute in Washington, D.C., found that raising the federal minimum wage to $17 an hour by 2028 would positively impact nearly 28 million workers across the country. The average affected worker who works year-round would receive an extra $3,100 per year. President Joe Biden and Senator Bernie Sanders both advocate for a shift from a “starvation wage” to a “living wage,” supporting a gradual increase after over a decade of stagnation at $7.25 an hour.

    Concerns about job loss

    However, the flip side of this wage increase is the projected reduction in employment opportunities, particularly affecting younger and less educated individuals. The CBO suggests that by 2029, a substantial portion of those rendered jobless by the bill might exit the labor force, raising concerns about long-term economic participation. The average estimate is about 700,000 workers would lose their jobs.

    Economic Ramifications

    The proposed wage hike could set off a chain reaction in the economy. Increased labor costs could lead to higher consumer prices, potentially decreasing overall buying power and reducing employment across various wage brackets. Employers must also pivot towards automation to mitigate increased labor expenses.

    Alternative Approaches

    Senator Bill Cassidy and Senate Republicans advocate a more gradual approach, proposing the Higher Wages for American Workers Act. They aim to reach an $11 federal minimum wage by 2028, prioritizing the protection of small businesses and preserving job opportunities. In contrast, advocates for the $17 minimum wage underscore its potential to positively impact around 28 million workers nationwide. They emphasize the need to fortify existing state-level standards and solidify wage gains, especially crucial in post COVID-19 pandemic economic recovery.

    State Variances

    While 30 states and Washington, D.C. already exceed the federal minimum wage, the impact of a $17 federal minimum could vary. Workers in these states may have already experienced wage hikes above this proposed threshold. In addition, the debate isn’t solely about the numbers; it’s about balancing economic progress and job security. Crafting legislation that uplifts workers without compromising employment opportunities requires navigating complexities.

    Tackle Labor Laws With GMS

    When all is said and done, navigating the complexities and unknowns of the minimum wage debate necessitates a careful balance between uplifting workers and safeguarding employment opportunities. As a small business owner, it’s essential to follow all laws and regulations and, in this case, those associated with minimum wage increases. However, you did not start your business to be an expert in wages and labor laws.

    Consider partnering with a professional employer organization (PEO). PEOs like GMS provide expertise in navigating evolving labor laws, providing vital insights into adapting compensation structures and HR strategies. By leveraging the resources and guidance of GMS, business owners can proactively analyze their workforce dynamics, streamline operations, and implement measures to mitigate the potential impacts of minimum wage adjustments. This partnership allows you to focus on areas that allow you to grow and not hold you back from doing what you do best. Contact our experts today to learn how we can lend a helping hand.

  • Ohio business owners – get ready! Ohio’s minimum wage is set to increase on January 1st, 2024, to $10.45 per hour for non-tipped employees and $5.25 per hour for tipped employees. The new minimum wage will apply to employees of businesses with annual gross receipts of more than $385,000 per year. Currently, the minimum wage is $10.10 per hour for non-tipped employees and $5.05 per hour for tipped employees. In addition, the 2023 Ohio minimum wage applies to employees of businesses with annual gross receipts of more than $372,000.

    History Of Minimum Wage

    The Constitutional Amendment passed by Ohio voters in November 2006 states that Ohio’s minimum wage must increase on January 1st each year based on the inflation rate. To determine this, the state minimum wage is tied to the Consumer Price Index (CPI-W) for urban wage earners and clerical workers over the 12-month period before September. This index increased by 3.7% from September 1st, 2022, to August 31st, 2023.

    What This Means For Small Business Owners

    As a small business owner, this change, which is rather small in the eyes of some, may seem like a significant increase. For employees at companies with annual gross receipts of $385,000 or less per year after January 1st, 2023, and for 14 and 15-year-olds, the minimum wage in Ohio is $7.25 an hour. This wage is tied to the federal minimum wage of $7.25 an hour, which, to change, requires an act of Congress and the President’s signature.

    Employers are required to post the most recent minimum wage poster in their business. To access the 2024 minimum wage poster, click here.

    Leverage PEO Expertise

    In the face of Ohio’s minimum wage increase in 2024, business owners find themselves at a crucial stage, seeking different ways to navigate these changes seamlessly. Have you ever heard of a professional employer organization (PEO)? A PEO gives business owners access to expertise in managing HR functions, payroll, compliance, and benefits. PEOs offer tailored solutions, from optimizing employee benefits to streamlining payroll processes, enabling businesses to adapt effectively to the new wage standards.

    Embracing the assistance of a PEO could be the key for Ohio businesses to not only weather the minimum wage increase but also to foster growth, stability, and success in the years to come. Fortunately, Group Management Services (GMS) is headquartered in Richfield, Ohio, ready to step in and help all business owners in Ohio navigate this wage increase. Get a quote from us today to kickstart your business in 2024.

  • Effective payroll management is one of the most essential parts of operating a successful business. It’s a complex process that, if mishandled, can result in serious legal repercussions, fines, and reputational harm. Payroll responsibilities go beyond the distribution of paychecks; they encompass a range of regulatory compliance and detailed record-keeping that can be confusing.

    As you prepare for the year ahead, it’s the perfect time to review your payroll processes and ensure your business has an efficient payroll system in place. This will help ensure compliance, foster employee trust, and ultimately contribute to the overall health of your business.

    To navigate the complexities of payroll, many small business owners turn to partnerships with professional employer organizations (PEOs). These organizations have expertise and specialized tools designed to streamline the payroll process and maintain compliance and efficiency. However, if you’re determined to tackle payroll alone, there are a few common errors you should be aware of.

    Common Payroll Mistakes To Avoid

    Employee misclassification is one of the most frequent pitfalls employers make. Employee classification is a framework used to categorize workers, which in turn dictates their pay structure and tax obligations. This classification also plays a role in determining eligibility for company benefits and differentiates between U.S. citizens and non-citizens.

    Under the Fair Labor Standards Act (FLSA), employers must categorize their employees as either exempt or non-exempt. Exempt employees typically receive a salary and are not subject to overtime and minimum wage laws. In contrast, non-exempt employees are paid hourly and are entitled to overtime pay and minimum wage protections. Misclassifying employees can result in over or underpaying your staff. Additionally, it can cause issues when determining if an employee receives benefits and overtime.

    In addition to exempt vs. non-exempt classification, another error is classifying an individual as an independent contractor rather than an employee. This misclassification can be costly as you will have to make back payments or other adjustments to rectify that employee’s pay. This not only affects the financial aspect of a business but can also have legal and reputational consequences.

    Hourly tracking and overtime

    Overtime compensation (1.5 times the regular pay) is mandatory for the following: 

    • Employees clocking in more than 40 hours per week
    • Work performed during designated breaks 
    • Travel time spent moving between job sites
    • Participation in activities beyond usual work hours, such as team-building events, training sessions, or other company-sponsored activities. 

    For non-exempt employees, meticulous tracking of work hours and any overtime is a legal obligation. Without close monitoring, you risk over or underpaying your staff, leading to a lengthy and complex correction process. It can also be uncomfortable for employees who might have to repay the company.

    Poor record keeping

    Keeping accurate records is a must for any business, especially regarding payroll. Under the FLSA, employers must keep accurate pay records for at least three years. These records should include specifics such as the number of hours worked, pay rates, and the dates of each payroll period. It’s a critical step to maintain compliance with labor laws and ensure everything’s squared away if any questions or issues arise down the line.

    Miscalculations

    It’s critical to double-check your team’s pay. Ensure you have the right tax rates, calculate overtime correctly, and understand how deductions should be applied. Payroll errors can be a hassle, but by taking the time to ensure everyone is paid correctly, you can save yourself a lot of headaches later on.

    Inaccurate paperwork

    Employees must complete W-2 forms to ensure accurate documentation of benefit withholdings, 401(k) plans, and health spending accounts (HSAs). Employees rely on their W-2s to file their annual tax returns; even a single mistake can lead to considerable complications and annoyance for you and your employees. Ensuring the accuracy of these forms is crucial for a smooth tax filing process.

    Missing deadlines

    According to Form 941, employers must make payroll tax payments periodically throughout the year. The frequency of these payments, whether monthly, semiweekly, or on the next day, depends on your total payroll amount and how long your business has been operating. Make sure you understand which depositor category applies to your business and adhere strictly to the corresponding deadlines. Neglecting to meet these payment obligations can result in substantial fines and legal consequences, which could be detrimental to your business.

    Garnished wages

    It’s important to understand that not all wage garnishments are handled in the same way. Obligations such as fines, taxes, and child support each have their own set of rules that can vary by state. You must adhere strictly to the instructions given by the issuing authority, such as the Internal Revenue Service (IRS), a state tax agency, or the U.S. Department of Education.

    Incorrectly handling your employees’ wage garnishments, such as neglecting to file or filing improperly, can have serious consequences. You could face legal judgment against your business that requires you to pay the total amount of the employee’s debt, meaning this isn’t something you can afford to mismanage.

    In addition to the common mistakes mentioned here, there are many less common mistakes we haven’t covered. So, it’s essential to keep a watchful eye over your payroll practices. Ensure you have robust systems in place and stay up-to-date on new laws and regulations in your area to remain compliant. Set yourself up for success next year by conducting a detailed review and audit of your payroll operations.

    How GMS Can Help 

    For small business owners, managing payroll and tax filings can be one of the most time-consuming and challenging tasks. Through expert payroll management services, GMS can save time and give you peace of mind. 

    We seamlessly blend proprietary technology with dedicated HR services and support from our expert employees. We offer: 

    • Payroll processing
    • Payroll software
    • Payroll tax management
    • Employee self-service

    Stop spending time worrying about payroll and start spending time growing your business. GMS is more than just another payroll management company – we’re a PEO that provides comprehensive HR solutions to solve your payroll and other administrative issues. Contact us today!

  • If you’re a California employer who’s only just adjusted to a $15.50 minimum wage, brace yourself for more change. The Golden State is gearing up for yet another hike, with the minimum wage set to rise to $16.00 per hour, effective January 1st, 2024. This move, driven by an inflation adjustment, is part of California’s commitment to ensuring fair compensation for its workforce. But what exactly does this mean for employers, and how can you prepare for the upcoming shift? Continue reading to prepare you and your business for this change.

    Beyond The Bottom Line: A Broader Impact

    The ripple effect of the minimum wage increase extends beyond those directly affected by it. While the primary focus is on workers earning minimum wage, the adjustments are bound to have a domino effect throughout the employment landscape. As wage structures shift, companies must reassess pay scales, maintain internal equity, and possibly revisit employee benefits to ensure their workforce remains motivated and engaged.

    White Collar Exemption Gets A Boost

    The minimum annual salary requirement for employees classified under the California white collar exemption will jump to $66,560, or $5,546.57 per month. This change prompts employers to review the classification of these employees, ensuring that both their duties and compensation align with exemption requirements. This meticulous audit will help maintain compliance with the evolving regulations.

    Tools Of The Trade: A Pricier Proposition 

    Industries that rely on employees to provide and maintain their own tools, such as tradespeople and technicians in various sectors, will feel the impact of the wage increase. The minimum wage for these employees will increase from $31 to $32 per hour. Business owners must consider how this change will affect their workforce and budgets, as this shift could lead to reevaluating compensation packages to retain skilled employees.

    Inside Sales Exemption Raises The Bar

    Employees eligible for the inside sales exemption from overtime must now meet a minimum annual compensation of $49,920, up from $48,360. As this exemption allows employers to avoid overtime pay for specific roles, companies should analyze their salesforce’s structure to ensure they remain compliant and avoid potential legal pitfalls.

    Fine-Tuning Premium Calculations

    Minimum wage increases necessitate recalibrating various premium calculations. From split-shift premiums to rates of pay for meal and rest period premiums, paid sick leave, and more – each aspect of compensation intertwined with the minimum wage needs to be reevaluated. This process ensures that employees receive fair and legal compensation while safeguarding employers from potential compliance issues.

    Looking Into The Future

    It’s important to note that this wage increase affects small businesses, not just large corporations. Regardless of size, all employers across the state must adapt to this change. From retail outlets to tech startups, the new minimum wage landscape will impact every aspect of California’s business environment.

    Employers should be prepared for additional adjustments as the state moves forward with its commitment to fair compensation. In October 2023, an announcement is expected to raise the minimum wage for the computer professional exemption from overtime, further shaping the employment landscape. Moreover, the interplay between state and local ordinances complicates matters. Employers must stay vigilant to local wage ordinances exceeding the state minimum, such as the recent increase in Los Angeles to $16.78 per hour.

    Partnering With A PEO: Your Bridge To Navigating California’s Wage Changes

    As California’s employment regulations continue to evolve, the challenges for small business owners multiply. Navigating the intricacies of wage adjustments, compliance nuances, and exemption requirements demands considerable effort and resources. Have you considered partnering with a professional employer organization (PEO)? A PEO like GMS can provide the expertise and support needed to navigate the changing landscape seamlessly. From managing payroll intricacies to staying updated on local ordinances and ensuring accurate exemption classification, a PEO offers the knowledge and resources that small business owners require. By partnering with GMS, businesses can confidently address the impending minimum wage increase and other regulatory changes, allowing them to focus on growth, productivity, and building a resilient workforce in the dynamic California market. Contact us today to learn more.

  • As the state of Michigan anxiously awaited the decision on minimum wage, the Michigan One Fair Wage v. Attorney General case results are in. On January 26th, 2023, the Michigan Paid Leave Medical Leave Act (PMLA) and Michigan Improved Workforce Opportunity Wage Act implemented in 2019 will remain in place. They found that the Michigan Legislature needed more constitutional authority to adopt and subsequently amend two 2018 ballot initiatives. If this had passed, the minimum wage would have increased to $12 per hour in 2023 and increase tipped wages to the full minimum wage. In addition, it would have enacted one of the country’s most extensive paid sick leave laws. These would have significantly impacted business owners, forcing them to make drastic changes to their paid time off policies (PTO) and procedures.

    What This Means For Business Owners In Michigan

    The good news is that because the lower court’s decision was reversed and given immediate effect, businesses are no longer forced to make significant changes to their PTO policies and wage schedules beginning February 19th, 2023. The minimum wage will stay the same at $10.10 an hour. However, there will most likely be an appeal, so employers will want to keep an eye out for any further developments relating to this case.

    How GMS Can Help

    Everchanging rules and regulations are constant battles business owners have to juggle. However, when you partner with a professional employer organization (PEO) like GMS, you no longer have to carry the weight on your shoulders. We take on all the administrative burdens you don’t have the time or expertise to manage. GMS experts keep you up to speed with new laws and regulations you should be aware of for your business. Save yourself time and contact us today.

  • Beginning January 1st, 2023, the following notices will be updated:

    • California minimum wage
    • Family care, medical leave, and pregnancy disability leave
    • Your rights and obligations as a pregnant employee
    • California law prohibits workplace discrimination and harassment
    • Transgender rights in the workplace
    • Know your right: workplace discrimination is illegal
    • Your rights under Uniformed Services Employment and Reemployment Rights Act (USERRA)
    • Safety and health protection on the job (Cal/OSHA)

    The following required pamphlets will also be updated:

    • Unemployment insurance
    • Sexual harassment

    Employers in California are required to post notices and distribute various pamphlets informing employees of their employment rights. Click here to view the updated “Know Your Rights: Workplace Discrimination Is Illegal” poster. The other posters are not available yet; however, they are likely to reflect the 2023 changes to California law with respect to an increase in the minimum wage and new protected categories, including reproductive health decision-making. In addition, all remote employees must receive a copy of these required posters and pamphlets. For more information, click here.

    Stay Compliant With GMS

    A new year comes with new laws and regulations you must stay on top of. When you partner with GMS, we ensure you remain compliant and are up-to-date with ever-changing rules and regulations associated with your business. We handle all the administrative burdens of your business that you don’t have the time or expertise to handle. Michelle DiGeroloma, PHR, GMS’ Client Services Manager, expressed, “Labor law posters summarize important information outlining employee rights under respective federal and state laws. These can be helpful for both the employee and employer when understanding the right of OSHA. It’s essential for employers to maintain their labor law posting by adding updates immediately upon release. This provides employees with the most up-to-date information.”

    Contact GMS today.

  • There are several issues on the state ballot for the 2022 election that could have significant implications for employers. The ballot considers measures on abortion, marijuana, minimum wage, and unions which were put to vote in 37 states on November 8th, 2022. Keep reading to learn how these issues will affect your business.

    Abortion

    In the wake of the U.S. Supreme Court ruling of Roe v. Wade, individual states can now decide whether to prohibit abortion or keep it legal. The court overturned Roe v. Wade, which protected the right to have an abortion throughout the country in the past 49 years. You may be wondering, how does this affect my business? Access to abortion affects employers and HR in crucial areas such as:

    • Health benefits
    • Paid and unpaid leave
    • Recruiting
    • Retention

    Marijuana Legalization

    Throughout the U.S., there are 19 states and the District of Columbia that have legalized marijuana. At the same time, 37 states use marijuana products for medical usage. Voters in Arkansas, Missouri, North Dakota, and South Dakota will have a chance to place their vote on this year’s ballot to permit the recreational use of marijuana. As an employer, it’s essential to consider that marijuana laws vary from state to state. As a result, reviewing the drug and alcohol policies is vital to ensure you remain compliant.

    Unions

    Over the past year, we have seen many companies implement unionization into their business. The ballot measures would create a state’s constitutional right to collective bargaining. In contrast, the ballot may prohibit employers from requiring employee labor unions. Employers would not be able to require membership for employees in their terms of employment.

    Minimum Wage

    Minimum wage reforms can be seen on the ballot for voters in Nebraska, Nevada, and Washington, D.C. These states are looking to increase the minimum wage of hourly workers. If passed, labor costs would increase for employers, making it prominent in industries with many hourly, low-wage workers, such as food service and hospitality.

    Equal Rights

    Equal rights protections have recently become more common at the state level. Currently, 21 states have equal rights amendments, and six have limited gender equality provisions. The ballot measure would prohibit discrimination based on sex, race, color, sexual orientation, religion, gender identity, age, disability, ancestry, and national origin.

    Count On GMS Experts

    As an employer, it is vital to understand the outcomes of election day. Legislative changes may be overwhelming, but you may have to consider them. After all, you probably did not go to school to become an HR specialist. Luckily, you don’t have to worry; GMS has you covered. When you partner with GMS, you gain a reliable team to ensure that your business remains compliant. Contact GMS today to learn more.

  • The California minimum wage is increasing to $15.50 an hour for all employers beginning January 1st, 2023. This new rate reflects an adjustment to the large employer minimum wage, which is currently $15 an hour. Joe Stephenshaw, California’s Director of Finance, determined the increase based on inflation. For small business owners, it’s essential to know that your employee’s minimum wage will also be increased to $15.50 an hour instead of its current rate of $14.00 an hour.

    Since there has been an 8.3 percent increase in inflation over the past year, multiple states have implemented higher minimum wages. The cost of food, shelter, and medical services has increased significantly over the past few months. The price of basic staples, including eggs and bread, has spiked, straining household budgets. Raising minimum wage rates would improve the overall standard of living with a more feasible income level to survive these unprecedented times.

    The California Labor Code 

    The California Labor Code is a collection of civil law statutes for the State of California. It’s made up of statutes that govern the general obligations and rights of individuals within the jurisdiction of the State of California. Workers are entitled to various rights and protections under California labor law. As inflation has impacted many individuals, the California Labor Code established the schedule for minimum wage increases. This includes an annual adjustment based on inflation taking effect with the 2023 large employer minimum wage.

    Every year, there will be adjustments to the state minimum wage based on inflation, with the announcements made on August 1st. In addition, the California Labor Code requires all small employer minimum wage rates in 2023 to match the large employer minimum wage rate if inflation has exceeded 7%.

    What Small Business Owners Need To Know

    As a small business owner during these challenging times, you must ensure you stay on top of the ever-changing rules and regulations. In addition, your employees are your biggest asset. When you partner with GMS, we ensure you are paying your employees the correct amount each year. As inflation and the COVID-19 pandemic have affected many individuals and companies, numerous businesses have looked to increase their minimum wage prior. Our team ensures you offer the best possible wage to your employees, allowing you to attract and retain your top talent. Contact us today to learn more.

  • The Michigan Court of Claims ruled earlier this year that the legislature violated the Michigan Constitution in 2018 by enacting, and within the same session amending, two ballot initiatives:

    • One requiring higher minimum wages
    • One requiring paid sick leave

    The 2018 ballot initiative was originally designed to raise the state’s minimum wage between 60 and 75 cents yearly until it reached $12.00 in 2022. The initiative was then intended to tack the minimum wage to inflation. Since employers and the relevant state agencies may not be able to implement the changes required by its decision immediately, the court has extended its stay until February 20th, 2023.

    What Employers Should Know 

    Starting February 2023, the standard minimum wage in Michigan will increase from its current $9.87 per hour to at least $12.00 per hour. Because the original 2018 ballot initiative would have increased the standard minimum wage to $12.00 effective on January 1st, 2022, the amount could increase in February 2023. In addition, the minimum wage for tipped employees will increase from its current $3.75 per hour to at least $9.60 or even higher.

    Paid Sick Leave

    Under the Earned Sick Time Act, Michigan employers must provide their employees 72 hours of sick leave annually. For employers with at least 10 employees, all 72 hours of leave must be paid. Small employers are to provide at least 40 hours of paid sick leave annually, while the balance of the 72 hours of leave may be unpaid.

    Partnering With GMS For Payroll Administration 

    Payroll is costly in both money and time. You probably know how your payroll responsibilities impact your operational efficiencies and bottom line. Between tax calculations, payroll, compliance, and all other payroll functions, there’s an insufficient amount of time to manage it properly. Stay up to date with regulatory changes and ensure your employees are being paid correctly by partnering with GMS. Contact us today.

  • Running a business is complicated enough. Having to deal with wage and hour violations only makes your ability to grow your business even more difficult.

    The majority of businesses in the U.S. are subject to the rules and regulations set by the Fair Labor Standards Act (FLSA). These rules establish standards for minimum wage, overtime pay, recordkeeping, and youth employment compliance.

    While these rules are designed to protect employees, it’s not always easy for employers to keep track of and apply these rules. It’s very easy for a simple, honest mistake to lead to an FLSA violation, which is why businesses should take the time and effort to conduct internal audits to identify any potential issues.

    Why Should Businesses Conduct Internal Wage And Hour Audits?

    The biggest reason to complete internal wage and hour reviews is quite simple – FLSA noncompliance is expensive. Violations can range from $1,000 to $10,000 each. In addition, FLSA violations could end up costing businesses in a couple of other ways. 

    According to the U.S. Department of Labor (DOL), the Wage and Hour Division took more than 24,700 compliance actions against businesses in 2021. Those actions led to more than 190,000 workers earning more than $230 million in back wages. This results in non-compliant companies owing an average of $1,211.70 in back wages for affected employees.

    In addition to back wages, financial penalties make FLSA violations even more costly for a business. The DOL will fine any company that willfully or repeatedly violates minimum wage or overtime pay requirements. These penalties include civil fines up to $1,000 for each violation.

    Repeated violations can also make a business a common target for future audits. The DOL chooses targets for wage and hour audits as part of an overall initiative or because individuals have filed complaints against a specific business. By failing an audit, the DOL has reason to check in on your business in the future for additional violations.

    An FLSA Audit Checklist

    A thorough FLSA audit includes multiple steps. Each of these steps is designed to provide a comprehensive overview of who is covered by the FLSA as well as, the different factors that can lead to violations.

    1. Review employee classifications
    2. Review regular and overtime pay calculations
    3. Review records and policies

    Employee classifications

    The first step of auditing your wage and hour practices is to examine the exemption status for all your employees. It’s essential to properly classify each employee to determine their exact employment status and whether or not they’re eligible for overtime.

    Employers conducting an audit should create a list that includes every employee. The safest way to start is to assume that every employee is eligible for overtime until proven otherwise. This employee list should include the following information to help employers determine overtime exemption status:

    • Job titles
    • Job descriptions
    • Salary information

    Once armed with this information, employers can perform a trio of tests to determine whether employees qualify as exempt or not. If an employee passes all three tests, employers can assume that they are exempt from overtime pay.

    • The salary basis test – Exempt employees must be paid a predetermined, fixed salary that cannot be reduced.
    • The salary level test – Exempt employees must meet the minimum salary threshold of $35,568, which equates to $684 per week.
    • The duties test – Employees must primarily perform a list of set duties established by the DOL.

    The easiest way to determine exemption status is whether an employee is a blue-collar worker or not. Blue collar workers are eligible for overtime, regardless of their salary. Non-salary employees are also eligible for overtime.

    When it comes to “white-collar exemptions,” employers will need to review each employee’s title, job description, and current duties. The DOL lists five separate groups as exempt from overtime pay, which are explained in-depth in our post on navigating white-collar exemptions. If a white collar employee’s duties align with any of the following groups and pass the salary tests, they are exempt.

    • Executive
    • Administrative
    • Professional
    • Computer
    • Outside sales

    Pay calculations

    Once you’ve successfully separated exempt and non-exempt employees, it’s time to review your pay practices to ensure that everyone is being compensated properly. This phase involves confirming the use of proper pay practices and calculations.

    • Ensure all hourly workers are being paid at least $7.25 per hour (or more, depending on your city/state).
    • Confirm that all employees who earned overtime were paid at least one and one-half times their regular pay rate after 40 hours of work in a workweek.
    • Double check to see if there are any employees who work in two different positions at differing rates that require special pay calculations and timekeeping practices.

    Records and policies

    An internal audit is a good time to review your company’s timekeeping policies. The FLSA requires employers to maintain a variety of records pertaining to their employees’ wages and hours. As such, your audit should confirm that your business records the following information and that all recorded information is accurate:

    • Employees’ personal information which includes, name, home address, occupation, sex, and birth date if under 19 years of age.
    • Hour and day when workweek begins.
    • Total hours worked each workday and each workweek.
    • Total daily or weekly straight-time earnings.
    • Regular hourly pay rate for any week when overtime is worked.
    • Total overtime pay for the workweek.
    • Deductions from or additions to wages.
    • Total wages paid each pay period.
    • Date of payment and pay period covered.

    How Often Should I Conduct FLSA Audits?

    In general, it’s best to perform wage and hour audits at least once a year. For example, some organizations plan a regular internal audit timed with either the beginning or end of their fiscal or calendar year.

    Another option is to conduct ongoing reviews throughout the year. This process involves more regular check-ins for compliance concerns, such as employee classifications or overtime calculations for new employees. Employers can also combine a comprehensive yearly audit with quarterly inspections to be as proactive as possible about FLSA violations.

    Stacey Larotonda, Vice President of Client Services at GMS, emphasizes, “FLSA self-audits should be done by every business on a consistent basis. It’s an easy way to make sure you aren’t hit with a significant fine should the Department of Labor want to audit you. Spending a little time on the front end can save you lots of money in the long run.”

    Protect Your Business From FLSA Violations

    A simple timekeeping mistake is all it takes to land your company in trouble with the DOL. Internal FLSA audits are one tool that employers can use to protect their business from misclassification, timekeeping errors, and other challenges. However, sometimes business owners can use some additional support.

    Simply put, most business owners don’t have the time to handle every tedious administrative task. GMS partners with businesses to help them simplify their core business functions. GMS provides your business with experts and a comprehensive web-based payroll solution to help you save time and protect your business against FLSA violations, wage and hour laws, and other costly issues. Our experts help business owners with:

    • Contractor vs. employee status
    • Recordkeeping
    • Overtime exemptions
    • Child labor

    Ready to streamline your payroll process and other HR tasks? Contact us now about how GMS can make your business a safer place.