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What is Going on With Overtime Regulations?


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Last year, discussion about changes to overtime regulations dominated a lot of discussions among employers. That all quickly came to a halt when the rule increasing the salary limits for certain white-collar workers which was scheduled to take effect December 1, 2016 was delayed by federal court injunction on November 22, 2016. Actions by President Trump since the beginning of the year suggest that the U.S. Department of Labor’s (DOL) overtime rule change for white-collar employees is unlikely to ever come to fruition.

That being said, there have been some suggested changes to overtime by the current members of the US House of Representatives. On May 2, 2017, the House of Representatives passed the Working Families Flexibility Act (also known as H.R. 1180). If approved, H.R. 1180 would authorize private employers to offer compensatory time instead of overtime pay for nonexempt employees who work more than 40 hours per week.

What is Compensatory Time Off?
Compensatory time off is already a common practice for many federal and state employers, but it is not currently allowed by the Fair Labor Standards Act (FLSA) for private employers. H.R. 1180 would amend the FLSA to allow this practice, if certain conditions are met.

Currently, the FLSA requires employers in the private sector to pay overtime wages to nonexempt employees for all hours of overtime worked. If approved, H.R. 1180 would amend the FLSA to allow private sector employers to provide either overtime pay or compensatory time off to nonexempt employees who work overtime hours.

H.R. 1180 is proposing that compensatory time off be calculated at the rate of 1.5 hours of compensatory time off for every hour of overtime work. As it stands, H.R. 1180 would expire within five years of its enactment. In addition, the bill would limit the amount of compensatory time off eligible employees may receive to 160 hours.

H.R. 1180 would only apply to private sector employers, meaning that if it were to be adopted, it would not affect current compensatory time off requirements for public sector (federal and state government) employees.

Voluntary Agreement and Usage
Under H.R. 1180, both employers and employees would have to agree to compensatory time off instead of overtime wages. In unionized environments, compensatory time off would have to be allowed by any applicable collective bargaining agreement. The agreement would need to be preserved in writing and take place before any compensatory time off begins to accrue.

Finally, the language of H.R. 1180 would prohibit employers from coercing or forcing employees to agree to receive or use compensatory time off instead of overtime wages. This means that employers would not be allowed to directly or indirectly intimidate, threaten or coerce (or attempt to intimidate, threaten or coerce) employees to agree to receive or use any accrued compensatory time off.

Eligibility
Under H.R. 1180, employees would be eligible to receive compensatory time off after 1,000 hours of continuous employment during the previous 12 months.

Payment for Unused Compensatory Time
H.R. 1180 would require employers to allow employees to use any earned compensatory time off within a reasonable period, as long as this does not unduly disrupt the employer’s operations.

However, employers would be required to provide monetary compensation to their employees for any compensatory time off that is not used by the end of the calendar year, although employers would be able to determine a different 12-month period as long as it remains consistent.

Unused compensatory time would need to be paid at a rate that would at least be equal to the employee’s regular wage rate. The employee’s regular rate would be the higher of:

The regular wage rate at the time the overtime work was performed; or

The regular wage rate at the time the unused compensatory time off must be paid.

Payment for unused compensatory time off would be required within a month of the end of the 12-month period.

There are not currently any changes in the law. Compensatory time is still not allowed in lieu of overtime pay for private employers under the FLSA. H.R. 1180 needs approval from the Senate and the executive branch before it becomes law and there are likely to be changes made to the current proposal before that happens. We will continue to provide updates as they become available.

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A Plus BenefitsWhat is Going on With Overtime Regulations?
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The Deadline to Comply with the New Overtime Rules is Approaching


If you haven’t started planning for the upcoming overtime changes, now is the time. As a reminder, on May 18, 2016, the U.S. Department of Labor (DOL) released a new rule regarding overtime wage payment in the United States. This new increases the salary threshold that “white collar” employees must meet in order to qualify for an overtime wage payment exemption. Employers must comply with the new rule by Dec. 1, 2016. Given the significant impact this change could have on your company’s bottom lcoins-1523383_640ine, it is important to start examining your payroll records and re-evaluating your overtime policies now in order to avoid compliance penalties in 2017 and beyond.

What is changing?

In order for an individual to be considered exempt from overtime under the “white collar exemption” that applies to professional, executive and administrative employees, they must meet three requirements. The second requirement is the only one that changed in the new regulations. The salary basis requirement and the duties test stayed the same

1- They must be paid on a salary basis (not hourly, piece rate, etc.).
2- They must be paid at least a minimum salary of $23,660 (increasing to $47,476 on December 1, 2016).
3. They must pass the FLSA duties test for overtime exemption based on their work.

In order to prevent the salary thresholds from falling behind in the future, the final rule requires that the minimum salary level requirements for the white collar exemptions will be updated every three years, starting with the first update January 1, 2020.

For administrative, executive and professional employees, the final rule allows employers to count up to 10 percent of employee nondiscretionary bonuses, incentive payments and commissions as part of the standard salary level—a practice that is not currently permitted. These bonuses may allow employers to more accurately represent employees’ earnings and help determine whether white collar exemptions should apply.

Employers are allowed to make one catch-up payment at the end of each quarter to satisfy the standard salary level. Payments must be made within one pay period after the quarter.

The final rule also increases the $100,000 salary level for highly compensated individuals to $134,004 per year—the 90th percentile of full-time salaried workers nationally.

What do employers need to do?

Employers should review their salaried exempt employees and determine if they have any employees that they are currently classifying as exempt from overtime under the professional, executive and administrative exemption or the highly compensated employee exemption. Then employers should identify those employees in this group whose salary below the new threshold.

These are the individuals you need to determine the best course of action for moving forward. Here are some examples to help you weigh your options.

Example #1- Employee who works regular overtime

Mary is a Graphic Designer whose work falls under the creative professional exemption.

She is currently paid a salary of $39,000 per year.

Mary’s work routinely takes her 46 hours per week (which means she works 312 Hours of overtime per year).

Option 1: Maintain exempt status and increase Mary’s salary to $47,476 per year.
Increased cost to employer: $8,476 per year
Pros: No need to track Mary’s hours, potentially improved employee morale due to pay increase
Con: Increased cost to employer

Option 2: Maintain Mary’s salary at $39,000/$18.72 per hour and adjust her status to non-exempt
Increased cost to employer
: $8,776.56 per year (in overtime pay)
Pro: Potentially improved employee morale due to pay increase
Cons: Increased cost to employer, adjustment in employee status, need to track Mary’s hours

Option 3: Maintain Mary’s salary at $39,000/$18.72 per hour, adjust her status to non-exempt and limit overtime
Increased cost to employer
: Depends on actual overtime worked
Pro: Minimal cost increase to employer
Cons: Need to redirect some of the employee’s work somewhere else, adjustment in employee status, need to track Mary’s hours

Option 4: Adjust Mary’s pay to $15.31 per hour and adjust her status to non-exempt
Increased cost to employer:
$9.88 per year
Pro: Minimal cost increase to employer
Cons: Potentially decreased employee morale due to perceived decrease in pay and adjustment in employee status, need to track Mary’s hours

Example #2- Employee who works occasional overtime

Greg is a Business Manager whose work falls under the administrative exemption.

He is currently paid a salary of $39,000 per year.

Greg’s work usually takes 40 hours per week. His overtime is rare, only totaling 36 hours per year.

Option 1: Maintain exempt status and increase Greg’s salary to $47,476 per year.
Increased cost to employer: $8,476 per year
Pros: No need to track Greg’s hours, potentially improved employee morale due to pay increase
Con: Increased cost to employer

Option 2: Maintain Greg’s salary at $39,000/$18.72 per hour and adjust his status to non-exempt
Increased cost to employer
: $1,012.68 per year (in overtime pay)
Pro: Small increased cost to employer
Cons: Adjustment in employee status, need to track Greg’s hours

Option 3: Maintain Greg’s salary at $39,000/$18.72 per hour, adjust his status to non-exempt and limit overtime
Increased cost to employer
: Depends on actual overtime worked
Pro: Very minimal cost increase to employer
Cons: Need to redirect some of the employee’s work somewhere else, adjustment in employee status, need to track Greg’s hours

Option 4: Adjust Greg’s pay to $18.28 per hour and adjust her status to non-exempt
Increased cost to employer:
$9.52 per year
Pro: Minimal cost increase to employer
Cons: Potentially decreased employee morale due to perceived decrease in pay and adjustment in employee status, need to track Greg’s hours

As you can see, there are multiple options and each situation is unique. As an employer, you will likely need to review each employee’s situation independently before making your decision. If you need help, contact A Plus Benefits for assistance at 1-800-748-5102 or humanresources@aplusbenefits.com.

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A Plus BenefitsThe Deadline to Comply with the New Overtime Rules is Approaching
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What Are the Differences Between a Professional Employer Organization (PEO) and a Payroll Company?


We have met with countless small business owners over the years and learned they have some specific things in common, no matter the industry or size of the company. First, small business owners are busy. They do not have extra time to spend processing payroll, fielding employee benefits questions or researching human resources best practices. If they do happen to have extra time, they would much rather spend it with their family and friends than dealing with administrative headaches.startup-593326_1920

This leads many business owners to consider available options to help with some of the time-consuming tasks related to running a business. Payroll processing is one of the tasks that is often first on the chopping block. Luckily there are many options for outsourcing payroll including payroll software companies, payroll processing companies, and PEOs. Sure, we’re biased being a PEO ourselves, but our clients have suggested several distinct characteristics that set a PEO apart from other payroll solutions.

Access to exclusive resources
Based on 26 years of experience working with business owners we know that they are almost universally passionate about what they do. That passion drives them to push toward their goals, even during the most difficult times. They are also understandably protective of their business and employees. They want to be able to offer the very best pay and benefits, but cost is a real concern. Working with a PEO allows a small business the ability to offer a wide range of Fortune 500 level benefits at unbeatable prices. This includes employee benefits such as medical, dental, vision, life insurance, disability, 401(k), flexible spending, dependent care plans and many more.

Benefits are just the beginning. A PEO is also able to provide human resources solutions such as leadership development training, tools for recruiting and retaining the best employee talent, and turn-key onboarding resources. While there are standalone resources out there for each of these areas, the cost of even one of these solutions is generally too high for a small business to justify.

Cutting-edge technology solutions backed by world-class service
It is undeniable that technology makes our lives easier.  The challenge with new technology is that it is only as effective as the person using it. Having the newest and best payroll software will not make someone instantly an expert in payroll.  Working with a PEO gives a company access to not only the very best payroll and human resources software available, but also to the expert-level customer service professionals that you need to make the most of the technology.

Coordination of all employee-related business functions
A small business owner often has to wear many hats. One of those hats is to coordinate the various vendors that are working with the company and employees. There may be a benefits broker for health and dental, and yet another for vision. There is likely a financial advisor helping with the 401(k) and maybe a supplemental insurance broker helping with life insurance and disability. That is four to five individual relationships to manage and invoices to pay and that is only relating to benefits. There are additional vendors for workers’ compensation insurance, drug testing, payroll and many more. Working with a PEO allows business owners to consolidate payroll and all of these items with a single vendor. This not only saves the time and frustration associated with dealing with multiple vendors, but also allows for a unique coordination of services not available anywhere else.

A PEO offers a suite services for small business owners that simply are not available anywhere else. As small business owners research and consider their options, we hope they will look at the opportunities working with a PEO will provide their business. We believe whole-heartedly that the industry offers solutions small business owners need to compete and win in an increasingly competitive market.

If you are interested in learning more about how a PEO can help your small business grow through high-level technology backed solutions, more affordable benefits and other exclusive resources that meet the needs of business owners and employees alike, contact one of Business Consultants for a free quote.

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A Plus BenefitsWhat Are the Differences Between a Professional Employer Organization (PEO) and a Payroll Company?
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What is a 1095 Tax Form?


This year, as a result of regulations in the Affordable Care Act, employees will be receiving a new tax document in additi1095on to their W-2 form. These forms will contain information that employees need to file their 2015 individual income tax returns. These forms may be sent by the health insurance provider and/or the employer (or A Plus Benefits for some clients) depending in the form required.

Form 1095-A

If your company participates on a health plan outside of A Plus Benefits that is from the health insurance marketplace, or if your employees have a plan they obtained on their own through the marketplace, they will receive 1095-A form. These forms are completed and sent by the marketplace health insurance provider.

This form includes:

  • The plan participant’s name
  • The amount of coverage they have
  • The tax credits they were entitled to
  • How much the participant paid for health insurance and how much was covered by tax credits.

This information will be needed for the employee to file their individual income tax return, adjust any tax credit payments and claim any premium tax credits that may be due for 2015.

Form 1095-B

Employees at companies that are considered non-applicable large employers (those with less than 50 full time equivalent employees) who offer a health plan will be sent a 1095-B form. These forms are completed and sent by the health insurance provider. This means that for non-applicable large employers who participate in the A Plus Benefits Employee Medical plan, A Plus Benefits will produce and send these statements to participating employees.

This form includes:

  • The type of coverage the employee has
  • Which, if any, dependents are covered by the plan
  • The period of time the employee was covered under the plan

The 1095-B statements will be used by the individual to complete their tax return and establish that they had Minimum Essential Coverage (MEC) during particular months, satisfying the individual mandate.

Form 1095-C

Employees at companies that are considered applicable large employers (those with more than 50 full time equivalent employees) will be sent a 1095-C form. These forms are completed and sent by the employer, often with the assistance of the health insurance provider. Applicable large employers who participate on the A Plus Benefits Health Plan may have elected to have A Plus Benefits assist with this notification or may have chosen to complete it on their own.

This form includes:

  • Information about the health coverage offered by the employer
  • Whether the employee was enrolled in this coverage
  • Which, if any, dependents are covered by the plan

Employees may need this information if they are applying for coverage through the health insurance marketplace instead of their employer in addition to the information for filing individual income tax returns.

Do employees need to wait to receive a 1095 form in order to file their 2015 individual income taxes?

According to the IRS, if you are expecting to receive a Form 1095-A, you should wait to file your 2015 income tax return until you receive that form.  However, it is not necessary to wait for Forms 1095-B or 1095-C in order to file.

The information on the 1095-B and 1095 C forms may assist employees in preparing their return, but they are not required. Employees expecting to receive a 1095-B or 1095-C can prepare and file their returns using other information about their health insurance. None of these forms will need to be attached to an employee’s tax return.

The vendor A Plus Benefits has partnered with to send out our 1095-B and 1095-C form has indicated that employees should have their forms by February 1, 2016. The forms will be arriving from a company called Sovos in an envelope that indicates that tax documents are enclosed.

If you have further questions about receiving your 1095 tax forms, please contact a member of our Account Management team for assistance at 1-800-748-5102 or service@aplusbenefits.com.

Please click here to view and print a PDF version of this document to share with your employees.

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A Plus BenefitsWhat is a 1095 Tax Form?

The Do’s and Don’ts of Final Paychecks


One of the most common questions we receive about payroll is when employees must be paid their final paycheck.  The laws regarding final pay for employer varies state to state. It is important to check your state laws so you don’t find yourself with unnecessary penalties. A Plus Benefits can also assist you with making sure you understand the state laws regarding final pay. Here are a few examples:money-548948_1280

Utah: If an employee is terminated (for any reason), the final check must be given within 24 hours.  If an employee quits, the final check must be given on the next scheduled payday.

Wyoming: The final check must be given within five business days, regardless of the reason for the separation.

Idaho: The final check must be given on the next scheduled payday, or within ten days, whichever occurs first, regardless of the reason for separation. If an employee makes a written request for earlier payment, employers must provide the final paycheck within 48 hours of receiving the request.

Nevada: If an employee is terminated (for any reason), the final check must be given immediately. If an employee quotes, the final check must be given on the next scheduled payday or within seven days, whichever occurs first.

Deducting money from an employee’s paycheck for items they have failed to return (unless you have a signed deduction authorization on file; contact an HR Advisor for details about this) is not legal in any state. Employees must be paid in full for the time they have already worked for you.  If an employee fails to return company property or caused damages, your only recourse is small claims court. Holding an employee’s paycheck because they have some of your property is also not allowed.

As you can see, some of the state laws have a very quick turnaround time for the final paycheck, especially if an employee is being terminated. Be sure to speak with your Payroll Specialist and an HR Advisor if you plan to terminate an employee to better coordinate the final check. Do you have questions about final pay? Contact us today for further assistance.

 

Image form Pixabay.

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A Plus BenefitsThe Do’s and Don’ts of Final Paychecks

A Plus Benefits Celebrates National Payroll Week


A Plus Benefits is celebrating National Payroll Week this week (September 7-11, 2015).dollar-726884_1280

National Payroll Week celebrates the hard work by America’s 150 million wage earners and the payroll professionals who pay them.  Together, through the payroll withholding system, they contribute, collect, report and deposit approximately $2.08 trillion, or 68%, of the annual revenue of the U.S. Treasury.

We are taking this opportunity to recognize the over 20 professional Payroll Specialists at A Plus Benefits who process payroll for thousands of employees each month with a week of fun events for the team.

Join us and thank your Payroll Specialist this week for all of their hard work.

Want to know more about National Payroll Week? Watch this short video.

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A Plus BenefitsA Plus Benefits Celebrates National Payroll Week

3 Reasons PEOs Make Sense for Small Businesses


When an individual decides to start a business it is because they love what they do. They have a passion for their industry that drives them to put in the time and resources to build a company of their own. What most small business owners don’t have a passion for is all of the pieces that come along with hiring employees. Finding and keeping great employees is necessary for any business that wants to grow and succeed. But many small business owners struggle to find the time to focus on the growth of their employees and their business. That is where a Professional Employer Organization (PEO) comes in.Success

Partnering with a PEO gives a business owner:

More time: Partnering with a PEO means you spend less time on the administrative tasks related to your employees. PEOs process your payroll, pay your quarterly and annual employer taxes, issue W-2s, complete unemployment paperwork, track employee time off, negotiate with insurance carriers, train employees, conduct drug screening and a number of other time consuming tasks that pull you away from the reason you went into business in the first place.

Better access to resources: The nature of the PEO relationship allows companies to have access to a wide variety of resources including employee benefits such as health, dental, vision, life insurance, disability, 401(k), and flexible spending accounts. These benefits usually come with enhanced coverage at a lower cost since PEOs are able pool small businesses together to provide better buying power.

Expert advice: Most business owners are experts in their field. They may know everything there is to know about plumbing, advertising, or dentistry, but they are not experts in human resources, payroll, benefits or risk management. A PEO hires skilled employees in each of these departments, providing immediate access to expert level advice whenever it is needed.

Over the past 25 years, A Plus Benefits has learned from our clients that the benefits small and medium sized business experience from partnering with a PEO are second to none. We have been lucky enough to work with great businesses over the years and learn a lot about what it takes for small businesses to succeed, but you don’t have to take our word for it. Research shows that “small businesses that use PEOs grow 7 to 9 percent faster, have employee turnover that is 23 to 32 percent lower, and are 50 percent less likely to go out of business than companies that don’t use PEOs.”

If you want to know more about how working with a PEO can benefit your business specifically, contact us today for a no-obligation consultation.

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A Plus Benefits3 Reasons PEOs Make Sense for Small Businesses

Do What You Do Best


“Do what you do best and then hire great employees and find great partners to help you in the other areas,” – Rich Maughn, General Manager of Freeway Propane.

To celebrate our 25th anniversary, A Plus Benefits is highlighting some of the great small businesses that have been with us through many of those years. Freeway Propane (www.freewaypropane.com) began in 1987 when the three Brown brothers, Joel, Mark and Chad saw the similarities between the work they did in plumbing and the propane industry. They saw a need in the community for new heating options and ran with it, starting with just a few small tanks and about 50 customers and growing from there.post-about-us

Rich Maughn, the General Manager of Freeway Propane has been an essential part of their growth over the years. After owning his own small business, Rich came to Freeway Propane over 10 years ago and got to work helping the company grow to where they are today.

Along the way, Freeway Propane has learned a lot about what it takes to succeed. Rich said when he started working with the company there were some issues with employees that prevented the company from growing the way they had hoped. It was important for him to get the right people in the right places and give them the tools they needed do their job. Rich said that A Plus Benefits has be integral to that part of their growth. “I know the HR advice I receive will be fair and honest.” That level of support gives him peace of mind to focus on growing the business.

Knowing he has a partner to help him with the payroll and HR pieces of the business, Rich has been able to devote time to providing the best service to their customers. He found that it was important to invest not only in great employees, but also high quality equipment. The company invests in new equipment frequently and makes maintenance of all of their equipment a top priority to ensure their customers have service they can rely on. Rich knows that the employees are also happier and more productive when they have the tools they need to complete their job. Using this strategy, Freeway Propane has grown by more than 50% in the past ten years and is now the utility company with the largest amount of propane storage in entire state of Utah.

As a family-owned business, Freeway Propane understands that companies don’t stay in business for almost 30 years without developing connections in the community and building valuable relationships. One of the things that Rich appreciates about working with A Plus Benefits, is the relationships he has developed with the internal staff. “It is great to be able to call and speak to a person; the same person who has helped us for many years. Those relationships are worth so much to us.”

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A Plus BenefitsDo What You Do Best
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New Overtime Rule for White Collar Workers on the Horizon


You may have heard that the Department of Labor released news on June 30, 2015 of a change coming to the minimum salary required for executive, administrative, and professional employees (typically white collar employees) to be considered exempt from overtime. The new rule would require that these employees who make under $50,440 annually to be paid overtime for any hours worked over 40 in a week, even if they are considered an executive, administrative or professional level employee under the Fair Labor Standards Act.dollar-499481_1280

Under current regulations, certain salaried employees can be exempt from overtime if they meet certain requirements: (1) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed; (2) the amount of salary paid must meet a minimum specified amount; and (3) the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations.

The second requirement, the minimum amount an employee must be paid, is the portion of the rule that is set to be changed. Currently the minimum is $455 per week (equal to $23,660 per year) and would be raised to $921 per week (equal to $50,440 per year).

This presents a challenge, particularly for small businesses that typically have strict compensation budgets. Here is an example of how a business could be affected by this rule:

Joe Smith works as an Assistant Manager at a retail store. He typically directs the work of 3 other employees in the store. He is responsible for interviewing and hiring new employees and providing disciplinary action to current employees. Joe’s job duties meet the requirements for an exempt level employee. His current salary is $32,000 per year, well above the current threshold. Joe usually works about 40 hours a week, but sometimes has to stay longer to conduct inventory, train new employees or cover for an employee who called in sick. Under the new regulations, Joe would have to be paid overtime anytime he worked over 40 hours in a week.

The company Joe works for has a few options of how they could adjust his salary.

1- If they want him to be exempt from n overtime, they could pay him at least $50,440 per year. This is a huge increase in his current salary and likely not practical.

2- They can continue to pay Joe a salary of $32,000 per year, but track his hours and pay him an additional $23.09 for each hour worked over 40 in a given week ($32,000/40/52 = $15.39 per hour and $15.39 x 1.5 = $23.09 per hour for overtime).

3- They can change Joe to an hourly employee and pay him $15.39 per hour for each hour worked up to 40 and $23.09 for overtime.

There is not an exact timeline for the release of the Final Rule, which would require all employers to make the change. The proposed rule will be published within the next week and then will be open for comment for 60 days. After the comment period, a final decision will be made. We will be sure to update you as we approach deadlines for compliance. If you would like to weigh in and add your comments to the discussion with the Department of Labor you can do so at www.regulations.gov once the comment period is open.

If you would like help auditing your employees to see how you will be affected by the new rule, you can contact an HR Advisor for assistance.

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A Plus BenefitsNew Overtime Rule for White Collar Workers on the Horizon