Weekly HR – Mileage Reimbursement
IRS Raises Standard Mileage Reimbursement Rates for 2018
For cities that use the IRS rate to reimburse for mileage, be aware that on January 1, 2018, the IRS raised the standard mileage reimbursement rates. That rate went up from 53.5 cents per mile to 54.5 on January 1, 2018.
For more information, sample policies or questions contact Andrea Shindlebower at firstname.lastname@example.org. Or for the IRS article go to https://www.irs.gov/newsroom/standard-mileage-rates-for-2018-up-from-rates-for-2017.
Weekly HR – Mileage Reimbursement
IRS Lowers Standard Mileage Reimbursement Rates for 2017
For cities that use the IRS rate to reimburse for mileage, be aware that on January 1, 2017, the IRS lowered the standard mileage reimbursement rates. That rate went down from .54 to 53.5 cents per mile on January 1, 2017.
For more information, sample policies or questions contact Andrea Shindlebower at email@example.com.
For for the IRS article go here.
Weekly HR News – FLSA
Tracking Time for the Exempt Employee
According to the Federal Labor Standards Act (FLSA), nonexempt (hourly) employees must be paid a minimum wage, as well as time and one-half their regular rate for all hours worked over 40 in a defined work week. Whereas, exempt employees are paid on a salary basis and based on other qualifying reasons, are exempt from overtime wages even if they work more than the designated 40 hours in a defined work week.
Hopefully your city has determined, or is working on determining, who is and who is not exempt from overtime under the new FLSA laws come December 1st. If you need assistance review the previous article on this subject and plan to attend the KLC Conference session on the new FLSA changes this October.
One question that always comes up in regards to exempt employees is whether or not the employer can actually track the time worked by exempt employees? The answer to that is a confusing yes and no.
So, let’s look at what an employer can and can’t do. First, there is nothing that prevents an employer from gathering in and out times, even if the employee is exempt. The problem would come up if the employer actually uses it to determine hours worked for payroll purposes, as exempt employees are not paid based on hours worked. And if tracking is used it must be for a legitimate reason other than calculating pay and the employee cannot be disciplined for failing to use the tracking method.
Some legitimate reasons include the allowance of comp time for exempt employees; when an employer is trying to determine the need for an additional employee; or the ability to make certain that all employees are following the schedule as set out in the personnel policy. One other important reason is in regards to the avoidance of the issues that may come from the misclassification of employees as exempt. If a mistake is made in classification (stating that an employee is exempt when really they should be non-exempt) and the employer has records of all hours worked the calculation of any overtime will not be as complex. No matter what the reason NEVER use tracking to calculate the exempt employees pay.
Also important to note is that employers should track time for nonexempt and exempt employees differently. Nonexempt employees’ time worked is calculated by the hour. Calculating exempt employees’ time can be a bit more challenging. This can be done in different ways. Some employers track the days worked by exempt employees, yet do not track hours. Other employers track time worked by applying any vacation or sick leave for any hours not worked. In other words, the assumption is made that an exempt employee will be paid a regular salary unless any vacation or sick leave is utilized. This way, an employer can correctly record the time an exempt employee has worked, calculate any vacation time or sick leave that was used, while still avoiding tracking the exempt employee by the hour.
There are many Department of Labor Opinion Letters as well as court cases that give examples of what is and is not acceptable. In Douglas v. Argo-Tech Corp., (6th Cir. 1997) the fact that an employee used a time clock did not make him a non-exempt employee. The exempt status was legally based on the administrative exemption. The need for tracking was based on the fact that the employer was required as a government contractor to keep records of the hours of all the employees no matter if they were exempt or non-exempt. Unlike the non-exempt employees his salary was not based upon the time clock hours, he was not forced to use the time clock and there was no discipline for failing to use it.
In a second case Talbert v. American Risk Ins. Co., Inc. the courts examined the ability to track time for compensatory leave. They stated that the FLSA provision that authorized governmental employers to provide compensatory time off in lieu of payment of overtime compensation to non-exempt employees did not prohibit private employers from using compensatory time for exempt, salaried employees, as long as employer's use of compensatory time did not result in any improper deductions from employees' salary.
As you can see from the information above, that although it can be done, tracking of an exempt employee’s time is a complex matter that requires serious thought and planning before implementation. If an employer is going to track, the best practice is to have a written policy to notify employees of any established requirements. The written policy would state the requirement, (i.e. to record and track hours for compensatory time) as well as the method used for recording hours and to specifically state that this information will not be used to calculate payroll.
For questions on wage and hour issues or other personnel matters, contact Andrea Shindlebower Main with the KLC Legal Department.
Weekly HR News – Budgets
Increase In Salary Level for Exempt Employees Will Affect 2016-2017 City Budgets
By now, most of you have heard about the Department of Labor’s (DOL) changes to the regulations that mandate which executive, administrative, and professional employees are entitled to the Fair Labor Standards Act’s (FLSA) minimum wage and overtime pay protections. The current regulations were last updated in 2004, and stated that an employee must make at least $455 per week ($23,660 per year) to be exempt from overtime. With the new change, which is effective December 1, 2016, the DOL has updated the salary level required for exemption to $913 per week ($47,476 annually), with automatic increases every three years to maintain the level at the 40th percentile of full-time salaried workers in the lowest-wage census region.
Both KLC and the National League of Cities (NLC) are very aware of the impact that these changes have on cities and as such, submitted comments last August in response to the Notice of Proposed Rulemaking. The two primary recommendations were (1) to use a regional approach (due to variations in pay based on location) and (2) to implement the change over the course of three years. Here is an excerpt from the Final Rule discussing the concerns:
“After considering the comments, the Department has made several changes from the proposed rule to the Final Rule. In particular, the Department has modified the standard salary level to more fully account for the lower salaries paid in certain regions. In this Final Rule, the Department sets the standard salary level equal to the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region (currently the South).”
What does this mean for city budgets right now? Any of your employees that are currently making less than $913 per week would be entitled to overtime for any hours worked over 40. As cities begin budget preparations for the coming fiscal year they should include the increased overtime costs based on the passage of this rule or consider an increase in wages for employees that may be close to the threshold. However, be aware that an increase in compensation, whether it is salary or overtime, could result in pension spiking issues penalties.
The Department of Labor is offering several free webinars to review these changes. More information on the webinars can be found on the DOL website. In addition, KLC is offering an all-day training June 1 that will offer in-depth discussions on this topic as well as many others. Information and registration for Part I of this training can be found on the KLC website.
If you have any questions about this or need any additional information contact Andrea Shindlebower Main, KLC personnel services specialist.
Weekly HR News – ALERT! CORRECTION!
Increase In Incentive Pay For Police and Fire Will Affect 2016-2017 City Budgets
We recently ran the following article regarding increased overtime costs for police and fire based on the change in incentive pay effective July 1, 2016. The article incorrectly stated that incentive pay is only included in unscheduled overtime for police and fire; the correct statement should have been that incentive pay is included in all police officer overtime and only included in unscheduled overtime for fire department members. See the full article as corrected below:
Included in the passage of the Commonwealth’s budget was an increase in incentive pay for police and fire. The current amount of $3100 will increase to $4000 per year effective July 1, 2016.
What does this mean for city budgets? Most importantly, this change will affect the payout of all overtime for police and the unscheduled overtime for fire. As cities begin budget preparations for the coming fiscal year they will have to factor these increased costs.
As a refresher, unscheduled overtime for fire personnel includes any hours worked over 40 in a workweek that are not part of an established work schedule. The hourly rate addition for unscheduled overtime is determined by dividing the annual amount of the supplement ($4000) by 2,080. For example, if a firefighter works 54 hours in a week where he or she is normally scheduled to work only 48, the firefighter has 6 hours of unscheduled overtime. The city will have to pay overtime on the supplement for the 6 hours of unscheduled overtime.
Incentive pay for all others (police, EMS) should be included in both scheduled and unscheduled overtime.
For more information on this service or any other personnel-related matters, contact Andrea Shindlebower Main, KLC personnel services specialist.
Mileage Reimbursement for 2016
For cities that use the IRS rate to reimburse for mileage, be aware that on January 1, 2016, the IRS lowered the standard mileage reimbursement rates. That rate went down from $0.575 to $0.54 on January 1, 2016.
For more information, sample policies or questions contact Andrea Shindlebower at firstname.lastname@example.org. Or for the IRS article go here.