What You Don’t Know Might Hurt You![By: Sam Neff]
Modern business owners deal with struggles that are very different than the ones faced by previous generations of entrepreneurs. This includes an increasingly competitive business landscape, challenges of attracting and retaining the best and brightest talent, and the never-ending pressures to find funding. On top of all this, today’s small to midsize businesses (SMBs) exist in what is possibly the most regulated business landscape in U.S. history.
As a human capital consultant at TriNet, I work directly with many of our thousands of clients who are constantly challenged to abide by a host of confusing and frequently changing laws. Central Florida is one location where I see a lot of businesses struggle, which is why TriNet has offices throughout the region to help entrepreneurs stay compliant.
Every SMB should be aware of the following major business regulations that will be impacting their business now and in the very near future.
Fair Labor Standards Act
Fair Labor Standards Act (FLSA) violations are some of the most common infractions I see. This is especially true among hospitality businesses, many of which are located in Central Florida. These businesses tend to have employees who don’t necessarily work a consistent “9 to 5” schedule and may frequently be called upon to perform job duties outside their normal function.
Updates to the FLSA that affect SMBs will take effect on December 1, 2016. Businesses should take the following steps now to ensure they are compliant with these federal changes and avoid hefty fines:
» Identify employees who need to be reclassified
The classification of employees as exempt or non-exempt under the FLSA is one of the most complex federal wage and hour law issues. All businesses should take a look at their job categories. If your business has many employees performing the same type of work, determine if they are truly in an exempt position. Also, exempt employees in the executive, administrative and professional classifications must make a minimum of $913 per week by the December 1, 2016 deadline. At that time, the annual salary threshold to be considered exempt will be $47,476 annually.
Determine if you will pay reclassified employees on a salary or hourly basis. Make sure your business identifies any effects reclassification will have on the benefits and bonuses employees may be receiving.
» Fine-tune your wage-and-hour policies and processes
Update or develop policies regarding off-the-clock work, breaks, travel time, mobile device use and remote access. Make sure your time-keeping processes and systems are in good working order.
Communicate your policy for hours worked to all employees in writing. Secondly, make sure your staff signs documentation that they have received and will abide by this policy. This documentation will prove helpful should you ever be sued for unpaid overtime wages.
» Affordable Care Act
Few regulations cause SMBs as much stress and confusion as the Affordable Care Act (ACA). The good news about the ACA is that it can be managed. My recommendation is that all SMBs – especially those who are rapidly growing – start by knowing their “applicable large employer (ALE)” status.
An ALE is an employer who employed a monthly average of at least 50 full-time equivalent employees during the prior calendar year. ALEs are subject to IRS tax penalties if they fail to offer coverage that is affordable and meets minimum value requirements for the majority of their full-time employees.
ALEs are also required to report group medical coverage information, if any, that was offered to full-time employees. This Section 6056 reporting is done by completing IRS forms 1095-C and 1094-C.
» Family and Medical Leave Act
The Family and Medical Leave Act (FMLA) is a federal law that provides eligible employees with unpaid, job-protected leave for specified family and medical reasons. If you have 50 or more employees for 20 or more work-weeks in the current or preceding calendar year, then your employees may be eligible for up to 12 work-weeks of leave in a 12-month period. It is important for covered employers to know that they must continue to provide the employee on leave with the same group benefits they received while working.
» Invest in Professional Help
FLSA, ACA and FMLA are only three of the federal regulatory areas that may apply to your business. They really just scratch the surface of the types of requirements business owners need to think about when it comes to being compliant and competitive. Affordable benefits offerings, payroll compliance and worker’s compensation protections, for example, are all major concerns of the SMBs I work with every day. Few SMBs can handle all the legal requirements and associated paperwork alone – and they shouldn’t have to. A professional employer organization, such as TriNet, can help you navigate through the compliance issues that affect you so you can focus on what you do best: driving your business.
Sam Neff PHR, SHRM-CP, is a human capital consultant with TriNet. For more information or to get your questions answered TriNet can be contacted at 888-874-6388.