The Labor Dept is now looking at July 2016 to implement their new rules regarding the pay threshold for those employees who will be subject to Overtime. The current rule states that any salary employee who is part of management and is paid more than $23,660 per year is exempt from OT pay. President Obama, through executive order, requested that the Labor Dept issue new rules increasing that pay threshold up to $50,440. Many anticipated that the new rule would go into effect at the beginning of 2016 after the public comment period expired in the fall of 2015.
As you know, paying an employee a salary does not exempt that individual from overtime pay. In general, the FLSA notes that an employee must spend over 50% of their time performing management functions in order to be exempt from overtime pay requirements, as long as, currently, they are paid over $23,660. That new wage threshold is proposed to go to $50,440.
This new proposal would significantly increase the number of people subject to OT pay. It is highly contentious as the business community has responded with at least 300,000 comments noting that the new rule would be needlessly expensive and potentially curtail business growth, hiring and career advancement.
In another story, the Treasury Inspector General for Tax Administration reported that the IRS failed to collect significant penalties and interest from companies who failed to respond to, or provide resolution to, discrepancies in more than $225 million in under-reported W-2 wages. The agency noted that while these companies completely failed to respond to IRS requests and notices, the IRS failed to apply any penalties to these companies due to computer programming errors. The agency strongly recommended that the IRS develop a more effective procedure to make sure that qualified penalties were assessed and collected as required by the law.
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