1. Payroll Law Update & Best Practices
Alison G. Fox
(574)

2. Payroll Law Update & Best Practices
Legislative Update
Deduction Law
Termination Pay
EEO-1 Pay Reporting

3. Legislative Update

4. Federal legislative efforts…
Working Families Flexibility Act
Passed House ( ) on May 2
Earlier similar version passed House in 2013 but did not pass Senate
Amends FLSA to allow non-government employers to offer compensatory time instead of overtime
Employer decides whether to offer compensatory time at all
Written policy
Can discontinue policy on 30 days’ notice
Employee must qualify for compensatory time:
Worked at least 1,000 hours for employer in the 12-month period before the date of the agreement or receipt of compensatory time

5. Working Families Flexibility Act
Employee decision to accept compensatory time:
Union employee -> governed by CBA
Non-union employee -> employee must knowingly and voluntarily elect compensatory time in writing before the work is performed
Compensatory time is earned like overtime (1.5 hours for every hour of overtime worked)
Use of compensatory time
Employer must allow employee to use time “within a reasonable period after making the request if the use … does not unduly disrupt operations of employer”

6. Working Families Flexibility Act
Cash-out:
Employer may pay employee for unused compensatory time in excess of 80 hours any time after giving employee at least 30 days’ notice
Any unused compensatory time can be “cashed out” at any time by written request to employer; employer must pay within 30 days
Employer must pay any unused time within 31 days of end of year (calendar year or other 12 month period designated by employer)
Employer must pay any unused time “upon the voluntary or involuntary termination of employment”
Cash-out rate:
Higher of pay rate at time overtime was worked or when compensation is paid

7. Working Families Flexibility Act
Includes anti-coercion provisions requiring employers to respect employee decisions and forbidding employers from forcing employees to use their time off

8. Working Families Flexibility Act
Proponents:
Would help workers balance competing demands of family and work by giving flexibility to earn paid time off
Opponents:
Gives employers more control over employees, allows them to withhold overtime pay for months
Really an “Employer Flexibility Act” because no guarantee employee can use the compensatory time

9. Overtime Regulations Update

10. Overtime Regulation Changes
New regulations were set to go into effect on December 1
Overtime Regulation Changes
TIMELINE

11. Overtime Regulation Changes
Increases minimum salary to pass salary basis test from $23,660 to $47,476 per year
Allows use of nondiscretionary bonuses and incentives to satisfy up to 10% of new salary requirement
Quarterly measurement; catch-up allowed
Automatic adjustments every three years to keep up with inflation
Raises HCE compensation requirement from $100,000 to $134,004 per year
Must receive $913 per week
Cannot pay less and use quarterly catch-up

12. Overtime Regulation Changes
New regulations were set to go into effect on December 1
Blocked on November 22
Appeal began December 1
Obama’s Department of Justice asked for expedited briefing
Overtime Regulation Changes
TIMELINE

13. Election

14. Overtime Regulation Changes
New regulations were set to go into effect on December 1
Blocked on November 22
Appeal began December 1
Obama’s Department of Justice asked for expedited briefing
Election
Trump’s Department of Justice put the brakes on
Requested extensions
Briefing now due June 30
Trump’s DOL Secretary pick affirmed on April 27
Overtime Regulation Changes
TIMELINE

15. Alexander Acosta Confirmation hearings:
In favor of overtime pay for overtime work
Proposed regulation goes too far, creates “stress on the system”
Believes salary threshold should be increase to reflect inflation
$33,000

16. Overtime Regulation Changes
New regulations were set to go into effect on December 1
Blocked on November 22
Appeal began December 1
Obama’s Department of Justice asked for expedited briefing
Election
Trump’s Department of Justice put the brakes on
Requested extensions
Briefing now due June 30
Trump’s DOL Secretary pick affirmed on April 27
Other possible approaches?
Overtime Regulation Changes
TIMELINE

17. Deduction Law

18. Deductions From Pay: High Stakes
Damages
Amount of illegal deduction
Attorney’s fees and costs
Liquidated damages
Twice the amount of unpaid wages
If court finds employer “not acting in good faith”

19. Is The Deduction Legal?

20. Indiana Law: Deductions must be…
In writing
Signed by employee
“By its terms revocable at any time by the employee upon written notice to the employer”
Agreed to in writing by the employer
An executed copy of the agreement is delivered to the employer within 10 days after its execution
For an allowed purpose

21. Purposes Allowed Under Indiana Law
Insurance premium
Charitable donation
Government bonds or securities
Stock purchases
Union dues
Purchase price of merchandise, goods, or food, for the employee's benefit, use, or consumption, at the written request of the employee

22. Purposes Allowed Under Indiana Law
Loan evidenced by a written instrument executed by the employee (subject to limits)
Retirement or long term disability plan
Employee account (credit union or other organization)
Life insurance

23. Purposes Allowed Under Indiana Law
Mutual funds
Judgments
Purchase of uniforms and equipment needed to fulfill duties of employment:
The total amount of wages assigned may not exceed the lesser of: (A) $2,500 per year;  or (B) 5% of the employee's weekly disposable earnings

24. Purposes Allowed Under Indiana Law
Training (unless provided in whole or in part through government economic development incentives)
Payroll advance
Vacation advance

25. What About Overpayments?
Employer may deduct overpayments after giving employee two weeks’ notice
Capped at lower of 25% of disposable earnings or amount by which employee’s disposable earnings exceed 30x the federal minimum hourly wage
Not if “in dispute”
If overpayment is 10x because of misplacement of decimal point, employer may deduct entire overpayment immediately

26. Is The Deduction Legal?

27. Termination Pay

28. Termination Pay Timing Vacation, PTO, and/or sick leave payout?
Default in Indiana is that accrued but unused vacation or PTO must be paid
Can change by written policy
Most common practices

29. Termination Pay Deductions for amounts owed?
Refusal to return equipment?
Pay advances?
Vacation used before it was earned?
Relocation advance?

30. EEO-1 Pay Reporting

31. What is “Equal Pay”?

32. Pay Equity?
After June 30, 2018, it is against the public policy of the state and an unlawful employment practice for an employer to discriminate against an employee on the basis of sex, race, or national origin by:
(1) paying wages to an employee at a rate less than the rate paid to an employee of:
(A) the opposite sex; or
(B) a different race or national origin;
for work in an equivalent job; or
(2) paying wage to an employee in an employment position that is dominated by employees of a particular sex, race, or national origin at a rate less than the rate at which the employer pays to employees in another employment position that is dominated by employees of:
for work on equivalent jobs.

33. Indiana Senate Bill 71 (introduced Jan. 2017)
After June 30, 2018, it is against the public policy of the state and an unlawful employment practice for an employer to discriminate against an employee on the basis of sex, race, or national origin by:
(1) paying wages to an employee at a rate less than the rate paid to an employee of:
(A) the opposite sex; or
(B) a different race or national origin;
for work in an equivalent job; or
(2) paying wage to an employee in an employment position that is dominated by employees of a particular sex, race, or national origin at a rate less than the rate at which the employer pays to employees in another employment position that is dominated by employees of:
for work on equivalent jobs.

34. New reporting requires:
Summary Pay Data
# full and part-time employees in each of 12 pay bands
Aggregate Hours Worked Data
Can use defaults for exempt
Filing deadline: March 31, 2018
“Workforce Snapshot Period” is October 1 to December 31, 2017
Who must include pay data?
100+ employees
EEO-1 Pay Reports

35. EEO-1 Pay Reports – Will It Happen?
OMB approved the new form, but can rescind that approval
U.S. Chamber of Commerce and Republican legislators are calling on OMB to rescind its approval
They claim that EEOC failed to address the cost to employers of upgrading their HRIS systems to accommodate the pay data reporting requirements
EEOC estimated 1.9 million hours of work and costs of $53.5 million for employers to comply
They assert the actual hours of work 8 million, and the real costs are around $400 million
EEOC Acting Chair Victoria Lipnic: Has noted that the rule would “fall squarely under” President Trump’s executive order requiring agencies to reconsider pending and existing regulations

36. Questions?