What are the increases, and what do they mean for both employees and employers? The final rule will impact about a million salaried executive, administrative, professional, outside sales, and computer employees come July 1 and another three million as of next January. This gives employers a lot of planning and budgeting to do in the meantime. Plus, the change includes a bump in the total annual threshold for highly compensated employees. 

Find everything you need to know about the DOL’s new overtime rule and what you should consider in the coming months. 

What are the New Overtime Rule Salary Thresholds?

Currently, the minimum salary for executive, administrative, and professional (EAP) employees to be exempt from FLSA minimum wage and overtime pay protections is $684 per week or $35,568 per year. This will increase to: 

• $844 per week (equivalent to $43,888 per year) as of July 1
• $1,128 per week (equivalent to $58,656 per year) as of January 1, 2025

The new overtime rule will also increase the salary threshold for highly compensated employees (i.e., those not entitled to overtime pay under the FLSA if they meet certain requirements) from $107,432 per year to $132,964 per year on July 1 and then to $151,164 on January 1, 2025.

These changes will impact not only typical overtime but also weighted overtime calculations. If you have employees who fill multiple roles and have multiple pay rates, now is the time to start planning and adjusting.

When is an Employee Exempt vs. Nonexempt?

Need a refresher on exempt vs. nonexempt employees? Nonexempt employees are paid hourly or do not meet the minimum salary thresholds listed here. They must be paid for all hours worked and any overtime (i.e., hours worked beyond 40 hours each week). Overtime must be paid at 1.5x their hourly rate.

Exempt employees are not entitled to overtime and/or minimum wage provisions set by the FLSA. Exempt employees usually hold executive, administrative, or professional roles. These employees must qualify for the EAP exemption, which is met when:

• The employee is paid on a salaried basis
• The salary is not less than the minimum salary threshold amounts listed above
• The employee’s primary duties are executive, administrative, and/or professional 

While the DOL states that it’s on the employer to determine whether the EAP exemption applies, you can generally use these guidelines: 

• Executive exemption: Their primary duties involve managing two or more full-time employees or their equivalent. They have the authority to hire or fire employees, and their recommendations regarding hiring, firing, advancement, or promotion hold particular weight (e.g., managers and supervisors).
• Administrative exemption: They perform office or non-manual work directly related to the management or general business operations and must exercise discretion and independent judgment (e.g., HR personnel or financial analysts).
• Professional exemption: Their primary duties require advanced knowledge in a particular field, prolonged, specialized education and/or invention and originality, and the consistent exercise of discretion and judgment.

What Other Changes Come with the New Overtime Rule?

Between 1938 and 1975, the DOL increased minimum salary thresholds every five to nine years. These periods became longer after 1975, meaning the salary threshold became less effective at helping qualify exempt EAP employees. 

As part of the DOL’s new overtime rule, they state the eligibility thresholds will be updated every three years starting July 1, 2027. The department says this ensures the minimums will “keep pace with changes in worker salaries, ensuring that employers can adapt more easily because they’ll know when salary updates will happen and how they’ll be calculated.” 

How Should Employers Handle the New OT Rule?

You’ll need to remain compliant as the new overtime rule goes into effect. However, as a small business owner, it may not be wise or financially feasible to give all affected exempt employees a raise to ensure they still qualify as exempt under the FLSA. And remember, it’s not only about the earning level—the worker also has to be paid on a salaried basis and perform exempt job duties, as explained above.

So, as you prepare for these increases to take effect and before you jump into any decisions:

• Evaluate current employee classification. Determine if they meet the updated salary threshold for overtime pay exemption. Check each team member’s salary level and primary job duties to ensure compliance with the new regulations. 
• Identify impacted employees. This means those who currently fall below the new salary threshold and are classified as exempt but may now be eligible for overtime and need to be reclassified from exempt to nonexempt status. 
• Assess the potential cost implications on your organization. That means payroll expenses, budgetary considerations, and overall labor costs. Do you need to make adjustments to accommodate overtime pay? 
• Consider compensation adjustments. Does it make the most sense to increase salaries to maintain exempt status? Can you adjust work schedules to minimize overtime hours or implement alternative compensation structures? Note that having more nonexempt employees could complicate your administrative responsibilities and software needs regarding employee timekeeping.
• Communicate changes transparently. If employee classification or compensation changes will occur, communicate them clearly and as soon as possible. Explain the reasons for the changes, how they’ll be implemented, and how they may impact affected employees.
• Review overtime policies and procedures. Update them to reflect any changes in employee classification or compensation resulting from the new overtime rule, and ensure they are clearly defined and consistently applied. Remember to train employees (especially newly nonexempt people) in areas like time tracking, rest and meal breaks, and overtime approval.
• Train managers and supervisors. Ensure those in leadership roles understand the updated regulations, employee classification criteria, and overtime policies. This will help maintain compliance across the organization, maintain morale, and prevent dissatisfaction and turnover. 

Know Your Overtime Regulations

If you have two or more employees and your business makes yearly sales of at least $500,000, it is covered by the FLSA, meaning you must provide overtime pay to nonexempt employees. Your state may also have specific overtime laws, even if you’re exempt from FLSA requirements.

Simply put, you should understand overtime pay rules and how they’ll affect your business and workers!

But we get it—these approaching increases are significant, so you may be wondering what the best strategy is for adjusting employee compensation and classification and communicating these changes with your team. If you want a partner to help you navigate this challenging matter in the coming months, contact BlueLion today at 603-818-4131 or info@bluelionllc.com to learn how we can help.

Under the Fair Labor Standards Act (FLSA), employers must pay non-exempt employees who work over 40 hours in a week an overtime rate of 1.5 times their hourly rate. Suppose an employer has employees who hold multiple positions within the business and, therefore, receive multiple pay rates. In that case, the employer must calculate weighted overtime when these employees work over 40 hours in a week.

So, what is weighted overtime, and how does it work? This formula averages the employee’s different pay rates, which you must use to calculate their overtime wages.

Keep reading below for a breakdown of when and how to calculate weighted overtime.

When Do Employers Have to Calculate Weighted Overtime?

In addition to non-exempt employees with more than one job and pay rate, you have to perform weighted overtime calculations for non-exempt employees who have overtime and earn:

• A non-hours-based pay like commission, or
• Earn a fixed salary for an alternating workweek

Weighted overtime pay does not apply to employees with one role at one pay rate. For those workers, use the standard overtime calculation of 1.5x their regular pay rate.

Don’t Forget Non-discretionary Bonuses & Commission

A common oversight we see among employers is not including nondiscretionary bonuses and commissions in overtime calculations. Both are considered part of an employee’s regular pay rate, so they must be included in overtime. 

As the name suggests, discretionary bonuses are awarded at your discretion. They are issued near the end of the pay period and are not part of a contract, agreement, or promise that led employees to expect them. 

On the other hand, non-discretionary bonuses are those that are predetermined and that employees expect to receive based on factors like performance, productivity, or attendance. These bonuses are typically included as part of an employee’s compensation package and are not solely at your discretion. This means that during overtime pay calculation, you must: 

• Add the value of the bonus to the employee’s total regular earnings for the pay period
• Recalculate the regular rate of pay for the specific pay period in which the bonus was earned by dividing the total earnings for the pay period, including the bonus, by the total hours worked
• Calculate the overtime pay based on this new rate

The same goes for commission, which is based on an agreement. For example, suppose you have a contract with a salesperson stating that you’ll give them a 5% commission for every sale. In that case, that is a non-discretionary amount—you can’t suddenly decide to pay them an arbitrary amount one week. 

As you’d expect, this rule also applies to weighted overtime calculations. However, employers can avoid accounting for overtime bonuses by paying them “as a percentage of a nonexempt employee’s total straight-time and overtime earnings over the bonus period,” according to the Society for Human Resource Management (SHRM). 

How to Calculate Weighted Overtime

Calculating weighted overtime involves adjusting the overtime rate based on an employee’s different pay rates for various job duties or shifts. Let’s break down this process into a few steps, followed by an example: 

1. Calculate the total regular wages: Add the employee’s regular wages multiplied by the hours worked at each pay rate. 
2. Determine the weighted average pay rate: Divide the employee’s total compensation by the total hours worked to get the weighted average. 
3. Find the weighted overtime total: Multiply the weighted average from Step 2 by 0.5 to get the weighted overtime rate. Then, multiply this rate by the overtime hours to determine the additional overtime wages.
4. Add the total earnings: Combine the employee’s regular wages (Step 1) and their weighted overtime total (Step 3). 

Even with this step-by-step, calculating weighted overtime can get muddy. So, let’s say a coffee shop employee works front-of-house shifts for $12 per hour and kitchen duty at $15 per hour. She worked 30 hours in the front and 20 hours in the kitchen in one pay period. 

1. Start by finding her regular pay: (30 hours x $12) + (20 hours x $15) = $660
2. Next, divide the employee’s total wages by the total number of hours worked (50) to get her weighted average pay: $660 / 50 = $13.20
3. Multiply the weighted average pay rate by 0.5 to get her weighted overtime rate: $13.20 x 0.5 = $6.60
4. Calculate her total overtime wages by multiplying the overtime rate by the number of overtime hours worked (10): $6.60 x 10 = $66
5. Determine the employee’s total pay for the pay period by adding her regular earnings and weighted overtime wages: $660 + $66 = $726 (her total pay)

Calculate Weighted Overtime Properly & Comply with FLSA

Calculating weighted overtime is easier to understand with an example in front of you, but adding in nondiscretionary bonuses and commissions can complicate matters. The overall process can also be time-consuming.

Despite the apparent tedium, using the weighted overtime pay calculation is not optional when you have non-exempt employees working in different roles at different pay rates who work beyond 40 hours in a workweek. To remain compliant with FLSA rules, develop clear bonus and commission structures, track them carefully, and invest in an automated payroll system that can handle time-tracking and calculations. 

Do you have questions about how weighted overtime works or other FLSA regulations? Contact BlueLion today at 603-818-4131 or info@bluelionllc.com, and our HR consultants will happily answer them!

Altogether, payroll software can play a significant role in saving time, reducing costly errors, and strengthening data security. But it’s still important to research various services and find the one that best suits your small business. Read on for key considerations and features to look for in your search.

5 Steps to Choosing a Payroll Software

1. Determine Your Business’s Payroll Needs

Start by defining your specific payroll requirements. This will help you understand what features your business needs and establish a budget. Consider your:

• Business Size and Growth: Can the software accommodate your business today and in the future as it grows? Small to medium businesses can likely find sufficient and affordable options with simpler features to avoid paying for features they don’t need, while large companies may need a higher level of service.
• Types of Workers and Pay Schedules: Do you have employees and independent contractors? Hourly, salaried, and tipped workers? How many of each? How often will your pay periods occur? These are crucial details to keep in mind while you research payroll systems.
• Staff Locations: If your team is spread out among different states or countries, ensure your payroll provider can manage their payments.
• Integrations: What other platforms does your business use? Your payroll software should integrate with your accounting software, time-tracking tools (many payroll systems now come with this feature), or HR management system.
• Benefits: You’ll also want to ensure your payroll system can handle benefits like health insurance, retirement contributions, paid time off (PTO), and worker’s compensation.

2. Establish a Budget

Payroll software services vary widely in features, pricing, and pricing structures. Most charge a monthly base fee plus a charge per employee.

As you evaluate options, look at the total cost of the software, including any setup fees, subscription costs, and additional charges for extra features or support. Researching various companies and pricing will give you an idea of what to budget based on your company’s needs. Remember, you often get what you pay for with payroll platforms when it comes to features and customer service! Look for a provider with reasonable costs and high-quality service.

3. Evaluate & Compare Payroll Software

Once you’ve determined your needs and set a budget, you can check out different payroll service providers and start narrowing down your list. As you do, keep a list of the must-have features your payroll software should have based on Step 1. At the very least, ensure it offers:

• Automation and direct deposit (pay attention to payment timing—is it next-day?)
• Payroll taxes and filing of federal and state taxes
• Integration with your essential business software
• Attendance and time-tracking functions (a necessity for hourly employees)
• 24/7 customer service availability in your preferred method

Again, most platforms should also offer mobile apps for you and self-service tools for your employees. For even more insights, check out reviews of your top runners. What do users say about the customer support and responsiveness? How about implementation and ease of use? You might even ask fellow business owners about their experiences with certain payroll companies.

4. Assess Compliance & Security Measures

Another important factor that deserves its own call-out is compliance and security—not to be taken lightly when it comes to your company and your team! Verify that your selected payroll software complies with relevant tax and labor laws and reporting requirements in your region or industry. 

These regulations are always changing, so you’ll want a provider that quickly adapts their software to these changes and keeps you compliant with wage and hour laws like overtime pay. 

Your payroll service should also use robust data security measures to protect sensitive employee information and ensure confidentiality. To be extra safe, you can even search online to see if they’ve been subject to any data breaches and ask them what protections they have in place if one arises.

5. Leverage Those Free Demos/Trials & Make a Decision!

After evaluating all of your business needs and features and narrowing down your top two to three choices, it’s time to test them out. Most providers offer a free demo and/or trial, so take advantage of them! This way, you can get an up-close experience with the platform, confirm it does all you need it to do, and ensure it’s intuitive for you and your team. 

Finally, it’s time to choose your payroll software. It may not hit every single bullet, but opt for one that aligns with your major must-haves and budget. And don’t be afraid to take them up on any implementation support to set your system up for success from Day 1.

7 Vital Payroll Software Features

To recap, below are several capabilities all payroll software services should include:

• Payroll Processing: Your payroll software should offer—you guessed it—automated calculation of wages, taxes, and deductions based on employee hours worked and pay rates. The platform’s primary function is paying employees the correct amount on time via their selected payment method.
• Direct Deposit: At this point, every payroll service should allow for the transfer of funds directly into employees’ bank accounts, eliminating the need for paper checks. While some still like receiving a paper check, the American Payroll Association’s 2022 “Getting Paid in America” survey found that 93% of respondents choose direct deposit. 
• Tax Compliance: Your payroll platform should also handle automated tax calculations, deductions, and filings to ensure compliance with federal, state, and local tax regulations. This includes managing W-2s and 1099s, as mentioned earlier. 
• Time Tracking: If you have hourly employees, it’s easiest to use payroll software that includes a time clock feature rather than finding a separate time-tracking tool. Connected time clock and payroll systems ease the approval and calculating process. If you need to use separate time and attendance software, ensure your payroll system is compatible. 
• Non-standard Pay: In addition to typical payroll processing and administration, you may have cases of workers’ compensation, wage changes and related adjustments, and bonuses. These calculations can add complication and time to your plate, whereas your payroll service should take care of them.
• Reporting & Analytics: A quality payroll system will generate customizable reports and analytics, allowing you to track payroll expenses, employee costs, and other financial metrics.
• Employee Recordkeeping: Finally, payroll software is one central, organized location for essential employee records, including personal information, employment history, and benefit details. 

Conclusion

By carefully considering these factors and evaluating the key features offered by different payroll software solutions, you can choose the best option to streamline your small business’s payroll process and meet your specific needs. Say goodbye to that time you and your team spent stressing over tax compliance, wage calculations, and recordkeeping! Investing in a payroll service is a MUST when you have a team of any size. 

Do you have questions about payroll software recommendations or need assistance establishing a process? Contact BlueLion’s HR pros at 603-818-4131 or info@bluelionllc.com today to learn how we can help!

We get it—another hefty responsibility for the small business owner to manage! What records do you need to retain? And for how long? 

Federal laws and agencies like the Federal Labor Standards Act (FLSA), Equal Employment Opportunity Commission (EEOC), and Department of Labor (DOL) have established employee recordkeeping requirements. Plus, you might have state and local laws to adhere to. 

Keep reading for a checklist of employment records you’ll need to keep, along with guidelines for how and when.

How long do employers have to keep employee records?

This depends on the type of records and any applicable federal, state, and local laws that apply. The Society of Human Resource Management (SHRM) notes that many employers keep it safe and straightforward by retaining employee records for seven years, which meets most regulations. 

Employee Personnel Files

Most personnel files should be retained for at least one year after employment ends. This includes everything from personal details to hiring documentation. Under the FLSA, employers should keep personal and hiring records, such as: 

• Full name and Social Security number
• Complete address
• Birth date (if under age 19)
• Demographic information
• Job description
• Job application and cover letter
• Pre-employment evaluations
• References
• Background checks and drug test results
• Offer letter
• Employment, noncompete, nonsolicitation, and any other contracts
• Start and end dates

When it comes to performance and disciplinary records, keep the following for at least two years after the employee leaves:

• Performance reviews
• Wages and changes 
• Trainings, classes, and certifications completed
• Job titles, promotions, or transitions
• Leaves of absence
• Corrective actions or complaints
• Exit interviews, layoff, or termination information

Form I-9, Employment Eligibility Verification

Form I-9 is one of the most important documents for every employee you hire in the United States, including citizens and noncitizens. You and the employee must complete your respective portions of the form by their first day of work. 

You must retain all I-9s for three years after the employee’s hire date or one year after their termination, whichever is later. Be sure to file them securely and separately from other employee records. The new I-9 alternative procedure offers a remote method, making completing and retaining each form much more efficient.

Payroll Records

This is another crucial area of employee records, which can become overwhelming and confusing due to the numerous documents and regulations around payroll. Many requirements range from three to seven years—and employers often err on the side of caution by sticking to the higher end. If you’re not sure if you should keep certain documents, hold onto them and consult with an HR professional. Below are some guidelines.

First, the Department of Labor (DOL) requires businesses to retain any wage-related records for at least two years, including:

• Employee schedules, whether fluctuating or fixed
• Regular pay rate
• Wage tables
• Time cards and piecework tickets
• Total daily or weekly straight-time earnings
• Total wages paid each pay period
• Overtime earnings
• Additions to or deductions from wages

If you’re ever selected for a DOL audit, you’ll need to provide these employee records, which should be stored at the workplace or in a central records office.

Regarding the method and format you use for timekeeping, you may use a time clock, have a designated timekeeper track employees’ work hours, or have workers write their own times. The DOL allows any of these as long as the records are complete and accurate.

For workers on fixed schedules, you can simply document their daily and weekly hours, indicating that they followed the assigned schedule. If an employee works more or fewer hours than their set schedule, record those hours on an exception basis.

Tax Records

The IRS also requires employers to keep employee records related to federal and state taxes for at least four years, including: 

• Your EIN
• Amounts and dates of all wages, annuities, pension payments, and tips
• The fair market value of in-kind wages paid
• Employee names, addresses, SSNs, and occupations
• Dates of employment
• Payment details for employees who were absent due to sickness or injury
• Copies of employees’ income tax withholding certificates (Forms W-4, W-4P, W-4R, W-4S, and W-4V)
• Dates and amounts of tax deposits you made
• Copies of returns filed and confirmation numbers
• Dates and amounts of fringe benefits and expense reimbursements
• Documentation to substantiate any credits claimed

Employee Benefits

According to the Employee Retirement Income Security Act of 1974 (ERISA), employers must retain employee records of 401(k) plans for at least six years after filing Form 5500. These include but are not limited to fiduciary plan documents, participant disclosures, payroll records, selections, and beneficiary designation forms. 

The EEOC also mandates that employers keep documentation of all employee benefits (e.g., pension and insurance plans) “and any written seniority or merit system for the full period the plan or system is in effect and for at least one year after its termination.” Records of benefit plans, enrollment forms, and plan descriptions should all be kept.

These requirements are part of anti-discrimination laws. If an EEOC charge is filed against your business, you must show these records and hold onto them until the charge or a related lawsuit is resolved. Retaining accurate, clear paperwork can protect your company in these situations.

Health & Safety Records

The Occupational Safety and Health Administration (OSHA) mandates retaining records of workplace injuries, illnesses, and exposure to hazardous substances for five years after termination. Additionally, HIPAA regulations require storing medical files separately from personnel files for confidentiality, while EEO laws protect sensitive personal information.

To be safe, keep documentation of:

• Employee medical records related to their ability to perform their jobs safely (e.g., fitness-for-duty exams, medical evaluations for specific tasks, and records of workplace accommodations)
• Leaves of absence and details
• FMLA leave documentation (see next section)

If an employee is exposed to a toxic substance, employers must keep documents related to all medical exams and safety data for 30 years after the worker’s termination.

Family and Medical Leave Act Documentation

The FMLA also has employer recordkeeping requirements, stating that businesses must maintain specific documentation related to employees’ leave for family or medical leave for at least three years. These include:

• Notices given to employees regarding their FMLA rights (e.g., general notice postings, individual eligibility notices, and rights and responsibilities notices)
• Records of the designation of FMLA leave, including any forms or communications specifying the leave as FMLA
• Medical certifications provided by employees to support their need for FMLA (which should detail the serious health condition of the employee or family member and the leave duration)
• Records of any paid and unpaid leave taken under FMLA, how it was designated (i.e., FMLA or otherwise), and benefits maintained during leave
• Employer policies and practices on benefits and compensation during paid and unpaid leave

Maintain the confidentiality of FMLA-related records by storing them separately and ensuring only authorized personnel can access this sensitive information. 

Conclusion

Investing the time and energy into proper employee recordkeeping is worth it to protect your company and employees and mitigate risk! This is a major area that will help you remain compliant and streamline HR processes. Inaccurate or missing paperwork can lead to one or a chain reaction of costly events, including:

• IRS or DOL audits
• Labor law noncompliance
• Disputes about compensation, hours worked, overtime, and more
• Discrimination and harassment allegations
• Privacy and data protection violations and breaches

And all of the above opens up your company to potentially significant penalties. For a small business, every dollar counts—and thousands of dollars in fines can take a severe hit on your bottom line!

Staying up on these many items and requirements takes time and effort. So, if you have questions about employee records and how long to keep them, contact BlueLion today for guidance at info@bluelionllc.com or 603-818-4131!

The bigger your company and the more locations it includes, the more challenging labor law compliance becomes. That’s why multi-state employers must beware of key areas such as:

• Payroll and taxes
• Benefits
• Security and data privacy 
• Health and safety
• Wage and hour laws
• Discrimination laws

We get it, it’s a lot of time, energy, and money—but overlooking these laws and regulations could lead to violations and significant penalties. So, how can you stay compliant everywhere while providing flexibility to your teams? Below, we explore laws and issues you should prioritize as a business with multiple locations.

Federal vs. State Labor Laws: What Do I Follow?

Whether you have a multi-location organization, a remote team of employees spread across states, or a combination of both, you must navigate the complex regulatory landscape of both federal and state laws. That means adhering to laws where your employees are working in addition to those where your company is headquartered!

First, key federal labor laws include: 

• Fair Labor Standards Act (FLSA): Regulates minimum wage, overtime pay, recordkeeping, and child labor
• Family and Medical Leave Act (FMLA): Provides qualified employees of covered employers to take unpaid, job-protected leave for certain family and medical reasons with continuation of group health insurance coverage
• Affordable Care Act (ACA): A series of health care reforms and mandates aiming to increase the quality and affordability of health insurance while reducing the number of uninsured individuals

However, many state laws supplement or differ from federal regulations. If your state or jurisdiction has set a higher standard, you must follow it in addition to federal laws. 

7 Can’t-Miss Multi-Location Compliance Areas

So, let’s look more closely at these specific compliance areas that businesses with multiple locations should pay attention to. 

1. Wage & Payroll Requirements

Multi-state employers have to stay updated on wage and tax laws. While the federal minimum wage remains at $7.25 an hour, many states have enacted higher minimum wages. That means you must adhere to the minimum wage laws of each state where you have employees and pay the highest applicable minimum wage. Beware of any other specific wage and hour laws in each location, such as overtime pay and meals and breaks.

Varying state tax regulations also impact payroll deductions, especially since the ACA went into effect. The health care reform law mandates that employees of multi-location companies all be counted on one payroll. Follow these tips to ensure payroll compliance: 

• Use a robust payroll system. This is vital for any business with multiple locations, as these platforms can adapt to diverse state requirements.
• Determine which states you have a nexus (i.e., where you’re required to follow tax laws of a particular jurisdiction) and must withhold income tax.
• Find out if each relevant state has a reciprocity agreement, meaning employees only have to pay income taxes in their state of residence rather than the state where they work.
• Identify each employee’s working state (i.e., where they conduct work for your company) and residence state.

2. Benefits Administration

Next, check for state-specific employee benefits regulations. Multi-location employers must comply with different state requirements regarding:

• Health care 
• Retirement plans 
• Paid leave
• Unemployment
• Worker’s compensation (mandated in most states)

For example, a growing number of states are implementing their own paid family and medical leave (PFML) laws, requiring employers to provide paid leave to eligible employees for family and medical reasons. These programs trump FMLA. 

This is why a centralized HR management system is a must! It will help ensure compliant, streamlined benefits administration and more thanks to employee classification functions. Plus, these platforms come with features like time clocks, schedulers, and recordkeeping, so you can also track things like overtime and breaks.

Pro tip: Put one location in charge of ACA adherence to prevent confusion and ensure health insurance and hours are tracked accurately. This way, you’ll avoid either a lack of coverage or duplicate coverage.

3. Safety, Security & Data Privacy

Businesses with multiple locations also need to follow state-specific workplace safety regulations, conduct regular audits to ensure a consistent standard of safety across all sites, and implement a unified health and safety training program for employees. Use measures like background checks (where legal) to ensure the safety of your team.

This also goes for cybersecurity regulations, which vary from state to state. Multi-state employers should:

• Implement standardized security protocols and employee training across all locations
• Understand how to navigate state-specific data breach notification requirements
• Create a privacy and security policy
• Use a virtual private network (VPN) for secure web browsing, encryption, and two-factor authentication on all devices for remote workers

4. Labor Law Posters

It’s a simple but essential task—we’re talking about displaying your labor law posters! Having up-to-date labor law posters at each location ensures compliance with state-specific poster requirements. Be sure to:

• Check the DOL’s Poster Advisor to find out which notices apply to your company
• Create a system and schedule for regularly checking and updating posters across all sites
• Post them in a conspicuous area, like the break room or lobby

BlueLion is now offering clients a convenient labor law poster service! We can send physical posters by state or provide an e-poster service for virtual employees and teams. Yep, remote businesses must post labor law notices, too! Ask us how you can get your posters easily today.

5. Employee Handbooks & Policies

Another critical tool for businesses with multiple locations is the employee handbook. It should be comprehensive and reflect the nuances of the employment laws in every state where the company operates and/or has employees.

While your handbook should include much more than compliance policies, you can set a solid foundation by including essential policies on federal laws that define the employer’s and the employee’s legal responsibilities. Then, include additional policies for each relevant jurisdiction. 

Conduct periodic reviews and updates to all company policies to ensure they align with changes in state regulations (your HR consultant can and should help with this!). Communicate policy changes with employees at all locations by sending the revised handbook. We recommend a handbook review at least once a year.

6. Remote Work Compliance

If you’ve been managing a remote team with employees spread across various states, you already know how tricky it can be. But if you’re new to it, you’ll need to brush up on each state’s remote work laws and regulations. Telecommuting employees are usually protected by the laws of the jurisdiction where they’re located (e.g., benefits, worker’s compensation, unemployment, paid leave, minimum wage).

Develop a thorough remote work policy addressing these state-specific laws (as noted above), as well as equipment, remote work safety, hours and productivity standards, and communication.

7. Additional Labor Laws to Follow

Although the above areas are vital to maintaining compliance for multi-state employers, there are many other labor laws and regulations on both the state and federal levels. Some cities and counties even have their own laws! So pay attention to state regulations regarding: 

• Background checks and salary history
• Drug testing
• Meals and breaks
• Tip pooling
• Anti-harassment and anti-discrimination training 
• Final paycheck requirements

Consult with your HR and legal teams to create a complete checklist and confirm nothing slips through the cracks.

Ensuring Compliance for Businesses with Multiple Locations

Yikes, that was a long list—and we only scratched the surface! Now that you understand the depth of compliance challenges multi-state businesses face, you also understand the importance of implementing proactive measures, continuous education, and technology solutions. As your team expands, you’ll need these tools to maintain compliance, efficiency, and a satisfied team.

Of course, it’s a lot of work for a business leader to handle on their own, so you should always turn to your HR professionals and attorneys. They will conduct due diligence and minimize legal risks and potentially hefty penalties. If you enter a new location, seek legal counsel who understands the state and local regulations!

Do you need guidance on multi-location compliance and labor law poster services to protect your organization? Reach out to BlueLion today at info@bluelionllc.com or 603-818-4131 to learn how our HR consultants can help!

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.

Many employers ask whether they must pay employees for time spent on certain tasks or travel. Check out our quick breakdown below.

The Portal-to-Portal Act: An Overview

The Portal-to-Portal Act outlines what activities are considered part of an employee’s compensable workday and what activities are not. The Act primarily deals with travel time and other activities that occur before or after the official workday.

Compensable Working Time

Under the Act, time spent on principal activities integral to the job is considered compensable. This includes setting up work equipment, safety checks, or other tasks necessary for the job’s performance.

This also means that activities like breaks of 20 minutes or less (e.g., coffee or rest breaks), emergency drills, and meal breaks if the employee must remain on duty or the break is shorter than 30 minutes. According to the Department of Labor (DOL), time spent in pre-shift meetings is usually payable, too. 

Of course, defining compensable time is not always black and white. Most employers don’t have to pay workers for washing up before or after work. However, certain companies may have to pay for this time if the employee’s job involves hazardous materials, in which case this activity is considered an integral and indispensable part of their job and safety.

Non-Compensable Working Time

Generally, the time employees spend commuting to and from work is not compensable under the Portal-to-Portal Act. This is considered ordinary travel that is not directly related to the job.

Activities that are preliminary to or postliminary to the employee’s work-related tasks are usually not compensable. For example, time spent waiting for an employer-provided shuttle to the worksite is typically unpaid unless specific circumstances apply.

Additional activities that employers do not have to pay workers for include: 

• Meal times while traveling for work
• Attending an optional training, seminar, or conference not directly related to the employee’s job

Off-site Parking, Employer-Provided Transportation & Waiting Time

One tricky area related to the Portal-to-Portal Act is off-site parking and employer-provided transportation to the worksite. Typically, courts have found the following time is not compensable:

• Waiting before employer-provided transportation to the worksite
• Travel time to the workplace*
• Time spent traveling back to the pick-up/drop-off destination

*Courts have ruled that employers must pay workers who are required to report to a separate destination for things like meetings, instructions, and equipment. However, travel time to a different meeting place is NOT compensable if the employees do so voluntarily. 

The employer may also be responsible for paying employees who spend time waiting at a job site to start work. This may occur if the workers arrive before the necessary equipment does, preventing them from conducting their principal duties. In this case, the employees would be considered “engaged to wait.”

Final Thoughts on the Portal-to-Portal Act

The Portal-to-Portal Act defines compensable time as spent on activities integral to the job. Regular commuting from home to the workplace is generally not compensable. Additionally, time spent waiting at and traveling to and from offsite parking via employer-provided transportation is usually unpaid.

Employers should understand their rights and responsibilities under this Act, but we know it can get confusing. Compliance with the Portal-to-Portal Act is crucial to ensure fair compensation practices and avoid potential legal issues. Consult with your legal counsel or HR team if complex or unclear scenarios arise—BlueLion is always here to guide you! Contact us at 603-818-4131 or info@bluelionllc.com to speak with an HR professional today.

New Hampshire has its own minimum wage and tip credit amount. Plus, hospitality industry employers in the Granite State must be careful to avoid coercion by requiring employees to participate in a tip pool. 

Keep reading for New Hampshire’s basic tip rules, tip credit explained, minimum wage requirements, tip pooling rules, and the treatment of mandatory service and credit card charges.

Basic New Hampshire Tip Laws

New Hampshire wage and hour laws consider tips the property of the employees who receive them. Employers are prohibited from keeping or distributing any portion of the tips received by their employees except:

• In the case of a tip credit, when the employer counts all or part of the employee’s tips to meet minimum wage requirements.
• As part of a valid tip pooling arrangement, when employees share and divide their tips. In New Hampshire, employees must opt into a tip pool—they cannot be required to participate.

More on both of these below!

Understanding Tip Credits & Minimum Wage Requirements

A “tip credit” is a provision that allows employers to pay employees in tipped positions less than the regular minimum wage as long as the employee’s tips bring their total compensation up to or above the minimum wage. Federal law and most state laws allow a tip credit—but only if you make more than $30 in tips each month.

New Hampshire’s minimum wage is $7.25 per hour for non-tipped employees, the same as the federal minimum wage. For tipped employees, the minimum wage (i.e., server’s wage) is $3.26 per hour, meaning the employer may take a tip credit of up to $3.99. The employer must make up the difference if an employee’s tips fall short of $7.25 an hour.

Employers can only pay employees this server’s wage if the employees:

• Work for a restaurant (including those who deliver prepared food), hotel, motel, inn, or cabin, and
• Regularly receive $30 a month in tips directly from customers

New Hampshire’s Strict Tip Pooling Rules

Tip pooling or sharing is when a group of employees pool their tips and redistribute them according to a predetermined formula. Under New Hampshire tip laws, employers cannot require or coerce employees to share or pool their tips.

Let’s look at a few key terms as defined by the New Hampshire Department of Labor:

• Coercion: The threat of or a direct action which results in an adverse effect on an employee’s economic or employment status
• Tip pooling: Tips from employees within the same job category are intermingled in a common pool and then redistributed among participating employees.
• Tip sharing: Tipped employees give a portion of their tips to other workers who participated in providing service to customers.

Simply put, your employees should not fear retaliation if they don’t agree to a tip pool.

Employers may set up a tip pooling or sharing system if employees request it. They can also guide staff on the tip pool arrangement and mediate employee disputes about the pool. Owners and managers are not allowed to participate in the tip pool.

What is Considered a Tip?

Tips are voluntary, gratuity-based payments given by customers to service industry workers in recognition of good service. They are considered the property of the employees who directly receive them. Whether in cash or included in credit card payments, tips are additional payments that customers choose to provide on top of the actual cost of goods or services rendered.

Employees must be allowed to retain the full amount of tips they receive, with no portion going to the employer, except when participating in a valid tip pooling arrangement (as mentioned earlier).

Now, let’s break down the exceptions of mandatory service charges and credit card fees.

Mandatory Service Charges

Mandatory service charges are different from tips. These charges are predetermined and automatically added to the bill for large parties or special events. Unlike tips, mandatory service charges are not discretionary or voluntary payments made by customers based on the quality of service received.

Under New Hampshire law, mandatory service charges are not considered tips. Instead, they are regarded as revenue for the employer. As such, these charges must be paid to employees within their hourly wages, subject to income tax withholding and other employment taxes.

Employers must communicate to employees and customers that mandatory service charges are not tips to ensure transparency and avoid confusion.

Credit Card Charges

When it comes to tips via credit card and whether employees are entitled to the full tip amount, the rules vary by state. Some states allow employers to pass on a portion of the credit card processing fee to employees. Others, like Massachusetts, prohibit this, stating that processing fees are a cost of doing business.

New Hampshire tip laws do not explicitly address the matter of credit card tips.

Tipping Legally in New Hampshire

Hospitality employers must understand and comply with New Hampshire tip laws to ensure employees receive proper compensation. Coercing tipped staff into sharing or pooling their tips can lead to significant fines and damage your reputation. 

When you understand the basic tip rules, tip credit, minimum wage requirements, tip pooling regulations, and the state’s definition of coercion, you’ll maintain a fair and compliant workplace.

Do you need guidance on your New Hampshire company’s tipping practices and policies? Our HR consultants are ready to lead the way! Contact BlueLion today at 603-818-4131 or info@bluelionllc.com to learn more about our outsourced HR services.

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.

Whether you’re hiring your first employee, have a specific question, or simply want to ensure you’re compliant, it’s always a good time to review. While these laws primarily affect non-exempt (i.e., hourly) employees, some also apply to exempt staff. 

And if you’re hiring minors and new to the process, remember that separate New Hampshire child labor laws have time and hour restrictions for workers under age 18. These even include specific requirements for different age groups (i.e., under 16 and 16 to 17).

Read on for answers to seven key New Hampshire labor law questions.

How is a workweek defined in New Hampshire?

A workweek is defined as a fixed period of 168 consecutive hours equaling 7 consecutive 24-hour periods. Employers must specify when their workweek starts and ends, including the day of the week and hour of the day, and the workweek must align with the calendar week.

What do I have to pay employees for?

New Hampshire wage and hour laws follow the Fair Labor Standards Act (FLSA) for hours worked, stating that employers must pay employees for all hours worked. 

However, this isn’t always black and white. There are specific requirements and exemptions for waiting time, travel time, and meeting, lecture, and training time. Let’s break them down.

Waiting Time

The FLSA recognizes three types of waiting time, which is defined as an employee’s time spent not performing the job duties for which they were hired. During these periods, employees may still be subject to their employer’s direction and their job duties.

• On-duty waiting time: This usually takes place during regular work hours and is when an employee awaits direction from their supervisor or manager. On-duty waiting time should be counted as hours worked. One example is a warehouse worker waiting for equipment to arrive.
• On-call time: Similar to on-duty waiting time, this involves an employee who must remain available after their shift ends. The on-call conditions vary by employer. For example, an on-call employee may be allowed to use that time for personal reasons, in which case they’re considered off-duty. But an on-call worker who is restricted from using that time for personal matters due to constant calls or other conditions from the employer could be considered on-duty.
• Off-duty waiting time: Since this occurs when an employee is free of their job duties, can leave their workplace, and can use the time as they wish, off-duty waiting time should not be counted as hours worked. For example, if a sales representative travels to a prospect’s facility for a meeting that ends at 12 p.m., doesn’t have another meeting until 3 p.m., and is free to do as they please during the time in between, they are considered off-duty.

Travel Time

Employers do not need to pay employees for their regular commutes between home and work. However, employees who travel as part of their work duties and between multiple worksites must be paid for that time.

There are several unique situations that may require you to pay for employees’ travel time. Learn more about travel pay and compliance.

Meeting, Lecture & Training Time

The FLSA states that employers must pay employees for attending meetings, trainings, and lectures. However, you do not have to pay staff for this time if it is: 

• Outside the employee’s regular working hours
• Voluntary
• Not directly related to their job, and
• Does not entail the employee doing productive work

If all four of these requirements are met, you do not have to pay the worker for their time attending the event.

What is the minimum time an employer must pay an employee who reports to work?

New Hampshire labor laws require employers to pay employees for a minimum of two hours of work at their regular pay if the employee shows up to work at your request—even if they work less than two hours. This is also known as “show up” pay.

Three main exceptions include:

• An employee showing up to work after you have made good faith yet unsuccessful attempts to notify them not to report for a scheduled shift. If this occurs, you may require the employee to perform assigned duties when they report to work.
• An employee who is scheduled to work under two hours in a shift, as long as the employee was informed in advance and in writing of the shift duration.
• Employees of counties or municipalities or si and snowboard instructional employees at ski resorts, as long as you provide them with other compensation that is at least equal to their rate of pay.

When do New Hampshire employers have to pay overtime?

New Hampshire also follows federal law here, requiring employers to pay overtime to employees who work more than 40 hours in a week. Overtime pay must equal 1.5 times the employee’s regular rate of pay for ALL hours worked past 40 unless exempt by the FLSA.

Typically, overtime pay only applies to hourly, or non-exempt, employees. However, some salaried employees are entitled to overtime pay. This can depend on their wages, job duties, and whether they are classified as employees or independent contractors. 

It’s always best to consult with your HR, attorney, or the New Hampshire Department of Labor (DOL) if you’re unsure about a worker’s overtime eligibility.

Are New Hampshire employees entitled to a lunch period?

Any employee working more than five consecutive hours is entitled to a 30-minute lunch or eating period. If you can’t afford to give an employee 30 minutes but they can eat while working, you must pay them for their time.

Note that any additional breaks lasting less than 20 minutes you choose to give employees must be paid.

How frequently must employers pay employees?

As a New Hampshire employer, you have the option to pay employees:

• Weekly, meaning you must issue paychecks within 8 days of the end of each pay period
• Biweekly, meaning you must pay them within 15 days of the end of a pay period

If you wish to pay employees less frequently, you must request permission from the DOL outlining:

• Payment method
• Either a semi-monthly (twice a month) or monthly pay schedule
• The beginning and end of each pay period
• Designated payday(s)
• Employee classification
• The salary range of relevant employees
• Your employer identification number (EIN)

The DOL grants these requests on a case-by-case basis but will not allow you to pay employees less than monthly.

Who is responsible for keeping records of hours and wages?

The employer must maintain accurate records of hours worked and wages paid for all employees for a minimum of at least three years. These documents will be subject to inspection if your company is ever selected for a DOL audit.

Adhere to New Hampshire Wage & Hour Laws

There are many gray areas and exceptions when it comes to New Hampshire labor laws. Every business and role is different, sparking unique scenarios and questions. The key to remaining compliant is not to guess or wait to find out the hard way! If you’re unsure about something, consult your HR or legal team. Illegal hour and wage practices, even if accidental, can open your company up to significant fines and lawsuits. 

If you have additional questions or need guidance on a specific situation, contact BlueLion today at 603-818-4131 or info@bluelionllc.com! Our HR consultants have extensive knowledge of New Hampshire wage and hour laws and will help you ensure your team is paid and treated properly.

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.

In this blog post, we’ll dive into the basic tip rules, the concept of tip credit, minimum wage requirements, tip pooling rules, and the treatment of mandatory service and credit card charges.

Basic Massachusetts Tip Laws

Massachusetts wage and hour laws consider tips the property of the employees who receive them. Employers are prohibited from keeping or distributing any portion of the tips received by their employees except:

• In the case of a tip credit, when the employer counts all or part of the employee’s tips to meet minimum wage requirements.
• As part of a valid tip pooling arrangement, when employees share and divide their tips.

More on both of these below!

Understanding Tip Credits & Minimum Wage Requirements

A “tip credit” is a provision that allows employers to pay employees in tipped positions less than the regular minimum wage as long as the employee’s tips bring their total compensation up to or above the minimum wage. Federal law and most state laws allow a tip credit—but only if you make more than $30 in tips each month.

As of January 1, 2023, the minimum wage in Massachusetts is $15 per hour for non-tipped employees. For tipped employees, the minimum wage (i.e., server’s wage) is $6.75 per hour, meaning the employer may take a tip credit of up to $8.25. The employer must make up the difference if an employee’s tips fall short of $15 an hour.

Massachusetts Tip Pooling Rules: Legal or Not?

Tip pooling or sharing is when a group of employees pool their tips and redistribute them according to a predetermined formula. Under Massachusetts tip laws, employers can legally require employees to share their tips. However, certain rules must be followed:

• Only wait staff, service employees, and service bartenders can participate in a tip pool. 
• Employers must inform all qualified staff of the tip sharing arrangement.
• Each employee must be able to keep at least the full minimum wage.

Additionally, owners and managers are not allowed to participate in the tip pool.

What is Considered a Tip?

Tips are voluntary, gratuity-based payments given by customers to service industry workers in recognition of good service. They are considered the property of the employees who directly receive them. Whether in cash or included in credit card payments, tips are additional payments that customers choose to provide on top of the actual cost of goods or services rendered.

Employees must be allowed to retain the full amount of tips they receive, with no portion going to the employer, except when participating in a valid tip pooling arrangement (as mentioned earlier).

Now, let’s break down the exceptions of mandatory service charges and credit card fees.

Mandatory Service Charges

Mandatory service charges are different from tips. These charges are predetermined and automatically added to the bill for large parties or special events. Unlike tips, mandatory service charges are not discretionary or voluntary payments made by customers based on the quality of service received.

Under Massachusetts law, mandatory service charges are not considered tips. Instead, they are regarded as revenue for the employer. As such, these charges must be treated as wages and paid to the employees, subject to income tax withholding and other employment taxes.

Employers must communicate to employees and customers that mandatory service charges are not tips, ensuring transparency and avoiding confusion.

Credit Card Charges

The employer may incur credit card processing fees when customers pay with a credit card. The employer is responsible for paying these fees as a cost of doing business rather than passing the charges onto the employees. Massachusetts tip laws prohibit employers from deducting these fees from the tips given by customers.

Employees must receive the total amount of tips given by customers, regardless of any credit card fees incurred by the employer. Employers should know this distinction and ensure employees receive the entire tip amount.

Ensure Legal Tipping in Massachusetts

Compliance with Massachusetts tip laws is vital for employers in the service industry. Understanding the basic tip rules, tip credit, minimum wage requirements, tip pooling regulations, and the treatment of mandatory service charges and credit card fees is essential for maintaining fairness and legality in the workplace.

By adhering to these laws, employers can protect their employees’ rights and maintain a positive work environment, while employees can receive the compensation they deserve for their hard work and dedication.

Do you need guidance on your Massachusetts company’s tipping practices and policies? Our HR consultants are ready to lead the way! Contact BlueLion today at 603-818-4131 or info@bluelionllc.com to learn more about our outsourced HR services.

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.