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Professional Service Agreement

The SESCO Report – April 2016

Overtime Rule Changes

The Department of Labor has proposed that the White Collar exemption salary threshold of $23,660 be increased to $50,440 per year. Due to the significant impact on SESCO clients and employers across the country, we've been closely monitoring this development.

The latest development is that the Department of Labor (DOL) forwarded its final overtime rule with the proposed increase in the guaranteed salary basis to the Office of Management and Budget (OMB) and Office of Information and Regulatory Affairs (OIRA) for review on March 17. This completes the last mandatory step that the DOL has to take before issuing the final regulations. Based upon this action, it's possible that the overtime rules could come sooner than the expected date of July/August of 2016, with a release in April or May followed by a 60 or 90-day implementation period. The final rule may also include changes to the "duties test" that define the types of positions who must be paid overtime.

As SESCO's history is rooted in Wage and Hour compliance and representation of clients before the Department of Labor, we recommend that the following steps be implemented now so as to prepare for these significant changes:

  1. Review your current salary-exempt incumbents and simply identify those who make less than $50,440.
  2. Request/require these positions to begin to maintain an accurate record of time, if not already, to determine actual hours worked. Use a reason such as ACA, benefits or other and not reference the Department of Labor.
  3. Over several weeks and months, determine whether or not these incumbents who make less than $50,440 work in excess of 40 per week.
  4. If overtime is worked, determine if hours of work can be reduced to 40 or less so as to avoid an increase in the salary or transitioning the pay plan to a nonexempt plan with overtime.
  5. If, in fact, the position is required to work over 40 on a regular basis, then you will need to determine whether or not you wish to increase the salary in one fell swoop to the minimum requirement, $50,440.
  6. If this increase is not practical, you will need to determine whether or not you wish to implement a nonexempt pay plan which includes an hourly rate with time and one-half (150%) over 40 or SESCO's recommended Fluctuating Workweek Method of Payment which is a guaranteed salary pay plan with half-time (50%) for hours worked in excess of 40 hours per week. The fluctuating workweek is a very viable pay plan for both employer and employee and will be the least disruptive to both parties. However, we strongly recommend that you contact SESCO before implementing such a program to not only ensure compliance to the Department of Labor regulations, but also ensure that it is properly implemented and communicated to staff so that there is no confusion.

Other SESCO initiatives include:

  • SESCO Compliance Publication "How to Comply with Wage and Hour Regulations" ($35.00 for retainer clients / $55.00 for non-retainer clients). Contact SESCO to order.
  • SESCO will be scheduling with clients and client associations a one-hour teleconference which will be provided at no charge covering basic Wage and Hour regulations as well as SESCO staff recommendations on not only how to comply with the new rules, but optional pay plans.
  • All retainer clients receive an annual Wage and Hour/HR compliance assessment. We will be scheduling these audits with clients over the next few months as requested to assess compliance and practices.
  • If you are not a SESCO retainer client, simply call or email us and we'll be happy to discuss our monthly Service Agreement.

Top 17 Wage-Hour Violations

The following are the top 20 ways to get in Wage and Hour trouble and thus face significant fines, attorney fees, and back wage liability.

1. Failing to record and pay for all compensable hours worked between the first and last principal activities of the day. For example, logging into computer programs or preparing a work area or office before the shift, changing into clothes or putting on protective equipment, traveling between work locations, deductions for smoking breaks.

2. Failing to record and pay for work the employer knew or should have known was performed before or after the scheduled work day, at home, or at other remote locations.

3. Failing to record and pay for all meal periods of less than 30, uninterrupted minutes.

4. Failing to include all compensation in the regular rate of pay before calculating the overtime rate of pay. For example, shift differentials, cash payouts from cafeteria benefit plans, call back pay, non-discretionary bonuses, and other forms of incentives and commissions must be computed in the regular rate for the purposes of overtime. Even if the payment as described is made monthly, quarterly, or at year-end, the organization must compute overtime on those earnings in which each workweek is covered.

5. Compensating nonexempt employees for overtime via compensatory time rather than payroll wages.

6. Employing the Fluctuating Workweek Method of Payment for overtime without meeting the following conditions: (1) the hours must fluctuate, (2) there must be a clear and mutual understanding, before the work is performed how overtime will be calculated, and (3) the salary may not be reduced in any work-week for any reason.

7. In the restaurant and hotel businesses, failing to properly inform nonexempt tipped employees that the employer uses the tip credit when computing regular and overtime rates of pay.

8. Failing to take full advantage of industry-specific exemptions and DOL regulations including retail dealerships, motor carriers, healthcare and other specially carved out full and partial exemptions.

9. Misclassifying nonexempt employees as exempt.

10. Treating trainees as exempt before they fully qualify under the applicable exempt duties test, such as a manager trainee.

11. Making improper deductions from the salaries of exempt employees.

12. Failing to implement and communicate a compliant mechanism where employees can report improper deductions from their earnings so that prompt corrections can be made.

13. Failing to meet recordkeeping requirements for both exempt and nonexempt employees.

14. Failing to stay informed of the Fair Labor Standards Act requirements.

15. Failing to conduct periodic, preventative compliance audits and to conduct periodic training of all firstline managers and payroll staff on their responsibilities to ensure compliance.

16. Failing to post required federal and state materials/posters.

17. Failing to understand and comply with specific state as well as county and city Wage and Hour Law requirements.

As commonly recommended, SESCO clients receive and should conduct an annual human resource compliance assessment to federal and state employment regulations. For those non-retainer clients, SESCO is available via a monthly service agreement to provide professional consulting support including required training and annual audits.

Why Are Millennials Getting Fired? Could It Be Their Anti-Work Attitude?

Millennials and their employers clash at work because of differing expectations and that's leading to more and more millennials getting fired.

First, millennials expect way too much from their employers. They want extensive training and mentoring that goes beyond the financial interests of the business. They want to develop beyond their primary job function and duty without regard to the needs of the business. They also carry an "anti-work attitude" that shows through commitment to the minimum time expected of them, and a desire for more flexibility. Finally, they prioritize happiness as a need to be filled by the workplace.

Even as employers try to provide more desired perks to hire and retain millennials, it has been difficult. Flexible work hours and schedules, a variety of creative benefits, short workweeks and comp time, more time off, more money, training and travel opportunities, etc. These efforts are backfiring on employers and employers are becoming more frustrated with millennials.

It's not surprising because parents of millennials raised them with "external motivators" to incentivize learning and obedience. When the kids are bribed, the future employees expect something for their efforts. A paycheck won't always cut it when millennials were raised with a different method to solicit their action.

Time management and attention to detail trip millennials up. The upswing, however, is that employers regard millennials as "being eager, dedicated people who score high on ethics and integrity." They do, in fact, take responsibilities for their actions.

Young workers aren't shirkers or ne'er-do-wells unwilling to work, but their expectations aren't aligned with the reality of the American economy. With profit margins tightening and the fact that labor costs are an employer's largest, single controllable cost, employers must do more with less. And doing more with less is an opposing reality with millennials. The reality is that millennials must learn to find intrinsic motivation (internal drive for work) so they can find real satisfaction and success in their careers.

A flexible 30-hour workweek with salary and benefits that doesn't require a financial struggle to balance a millennial's lifestyle would be nice, but so would be a summer cabin in the Alps. So employers try their best to find workers who do their best to proactively seek resources on their own to help them close the gaps and skills and knowledge in the workplace. Millennials who educate themselves. Who work independently. Who expect more from themselves instead of their employers. If millennials can pull this off, growth in the workplace resulting with a great salary and benefits might follow and ultimately, the millennials may become a crucial part of the workforce.

Special Thanks to SESCO Clients!

LifeSpan Network
Columbia, MD

The AAM Group
Piney Flats, TN

Gardner, Inc.
Wytheville, VA

Radney Funeral Home
Alexander City, AL

Woodway Water Authority
Pennington Gap, VA

Birthplace of Country Music
Bristol, TN

First Team Auto Mall
Roanoke, VA

Circle of Care in Salem
Salem, OH

Ocoee Health Corporation
Benton, TN

First Presbyterian Church
Bristol, TN

National Pawnbrokers Association
Keller, TX

SESCO Client Feedback

"Paul is extremely knowledgeable and credible. Both were essential elements in negotiations. Scheduling and working directly with Paul made the process easy. I've had limited experience (personally) with SESCO, but those I have are positive." ~ Randy Stilwell, Human Resources Director — DSI Underground Systems, Inc.

"The booklet and the thorough information Joel gave us as he took us through the training were excellent. Our staff refers to this almost daily. Joel has a personable and one-on-one, friendly, thorough attitude. He is very professional, yet down to earth. SESCO is able to meet the needs of any organization of any size." ~ David Guinn, Director of Operations/Human Resources — FACE Amusement Group"

"HR topics are really important to our audience, so Bill's expertise matched what they needed. Bill was on time, did what he promised and was easy to work with." ~ Thomas Parmalee, Executive Director — Kates-Boylston Publications

Featured Product of the Month

SESCO's Satisfaction Program

How do your employees really feel about your organization? Your peace of mind, prosperity of operating freedom depend upon the answer.

SESCO's Satisfaction Survey has been validated by the University of Tennessee — a 94% validation rate. The purpose of SESCO's survey is:

  • Communications — To provide meaningful communication between all employees and the management staff.
  • Insight — To help the organization take a candid look at themselves so that they can continue to improve the organization and eliminate unnecessary frustration which leads to poor morale, productivity, and turnover.
  • Future Goals — To establish plans and time tables so the organization can continue to render even greater service and obtain maximum job satisfaction.

SESCO's survey consists of a minimum of five (5) formal in-depth reports. These reports include:

  1. Computerized results and analysis covering all questions and 18 opinion categories.
  2. Confidential report including open comments which are anonymous, written comments of each employee's own feelings and opinions.
  3. A report to supervisors for their specific department/area of responsibility.
  4. Feedback communication programs to help employees see the results and understand the organization's commitment.
  5. SESCO's analysis with follow-up recommendations.

Conducting an employee satisfaction survey is one of the most important and meaningful experiences you can provide yourself, your management team, and your employees. The success of your organization lies in the hands and minds of your employees. Unless you are continually knowledgeable of their on-the-job needs, your overall effectiveness is greatly impaired. Contact SESCO to plan and schedule your survey.

The Greatest Asset — Attitude

The longer I live, the more I realize the impact of attitude on life. Attitude, to me is more important than facts. It is more important than the past, than education, than money, than circumstances, than failures, than success, than what other people think or say or do. It is more important than appearance, giftedness or skill. It will make or break a company...a church...a home. The remarkable thing is you have a choice everyday regarding the attitude you will embrace for that day. We cannot change our past...we cannot change the fact that people will act in a certain way. We cannot change the inevitable...the only thing we can do is play on the one string we have, and that is our attitude.

I am convinced that life is 10% of what happens to me and 90% how I react to it. And so it is with you...

You are in charge of your attitudes. ~ Charles Swindoll

SESCO's Spring Seminar Series 2016

Bristol, VA

May 18, 2016
Human Resources — The Advanced Course
Courtyard by Marriott

Richmond, VA

May 25, 2016
Human Resources — The Advanced Course
Virginia Community Healthcare Association

(SESCO has partnered with one of our valued clients, Virginia Community Healthcare Association, to host our Richmond Seminar Series.)

Click HERE for a Registration Form

State and National Business and Trade Associations, Chambers of Commerce and Human Resource Associations are welcome to contact SESCO to book a professional speaker for annual conventions and seminars. Contact Bill Ford at 423-764-4127 or by email