Construction Today - September 2016 - 9

Reducing the Impact
In our experience, we know that many
construction companies have salaried
office or administrative staff, project
supervisors, independent contractors or
interns and will be impacted. The options
for these employees are:
* Increase of the staff salary levels to the
new minimum;

* Change the employees from salary to hourly;
* Re-align staff hours and responsibilities to minimize the impact
of overtime on the bottom line; or
* Explore fluctuating workweek agreements.
One idea that has been discussed by employers involves giving
workers who exceed 40 hours a week (during busy periods) time-off
when business is slower. Note: This option is specifically not allowed
by the Final Rule. The Final Rule does not require that if you convert
salaried employees to hourly that you calculate the new rate based on
their current salary divided by 2,080 (40 hours a week times 52 weeks)
hours. Rather, you can divide the current salary by the expected hours
to be worked. The potential issue with doing that is many employees
would have an adverse reaction to receiving less pay than they currently received on weeks where overtime is not needed.

Mary Beth Saylor, CPA is
a principal of Windham
Brannon, an Atlanta-based provider of tax,
audit and consulting
services to individuals
and organizations.
She specializes in the
construction and real
estate industries. She
can be reached at (678)
510-2803 or msaylor@
windhambrannon.com.

Prepare and Comply with the Ruling
We are implementing the following best practices to help our
construction clients prepare, comply with and minimize the consequences of the Act:
* Step 1: Employers should prepare formal job descriptions with
clear duties and responsibilities. Even though the duties test for
each exempt classification did not change, we find that many
construction companies haven't documented whether their
salaried employees meet the duties test in the first place.
* Step 2: Evaluate the duties performed for each salaried position
to be certain the position qualifies to be exempt, regardless of
the salary level.
* Step 3: For salaried employees that meet the duties test, but do
not meet the minimum salary requirements, determine the best
alternative between changing their status to hourly and paying
overtime as needed or increasing their salary to the minimum level.
* Step 4: Assess all independent contractors to determine if they
qualify as independent contractors under the IRS 20 factor test.
If they do not, construction companies should complete the
above steps for those employees.
* Step 5: Once a construction company has evaluated the status
of its salaried employees, meet with the affected employees to
explain the new regulations and how it impacts them as well as
the organization.
The Department estimates the new regulation will increase wages
$1.5 billion annually, with $1.2 billion in increased overtime pay (or
$285 per impacted employee) and $300 million in corresponding administrative costs. With America's approximate $8 trillion in annual
wages, the overall increase is minimal, but will certainly impact certain industries more than others, such as the retail, hospitality and
restaurant segments. However, that doesn't mean other industries,
such as construction, can afford to ignore the impact and not prepare
prior to the Dec. 1 deadline.

9

SEPTEMBER 2016 CONSTRUCTION-TODAY.COM

REGULATIONS

The Final Rule sets the standard salary
level at the 40th percentile of weekly
earnings of full-time salaried workers in
the lowest-wage Census Region, currently
the South: $913 per week or the equivalent to $47,476 per year. In addition, the
salary levels are adjusted so that they will
maintain the same percentile of weekly
earnings of full-time salaried workers
every three years, starting Jan. 1, 2020.
The Final Act will force construction
companies to, at a minimum, evaluate how
to alter the compensation structure of its
salaried employees with salary ranges between $23,660 (the prior minimum salary
level) and $47,476. Those employees will
either need to be reclassified as hourly employees and paid overtime when necessary
or have their salaries increased above the
new minimum salary level standard to be
exempt. This could lead to an increase in
temporary or flexible workforce employees
to meet those overtime needs, and construction company leadership will likely
have greater challenges administering
schedules to minimize overtime pay.
Additionally, the Highly Compensated
Employee exemption will require a $134,004
minimum salary to qualify as exempt (this
is based on the 90th percentile of weekly
earnings for a full-time salaried worker). The
Final Rule also amends the salary basis test
to allow employers to use nondiscretionary
bonuses and incentive payments (including
commissions) to satisfy up to 10 percent of
the new standard salary level. These bonuses
must be based on measurable metrics and be
paid at least quarterly.


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Table of Contents for the Digital Edition of Construction Today - September 2016

Contents
Construction Today - September 2016 - Cover1
Construction Today - September 2016 - Cover2
Construction Today - September 2016 - 1
Construction Today - September 2016 - Contents
Construction Today - September 2016 - 3
Construction Today - September 2016 - 4
Construction Today - September 2016 - 5
Construction Today - September 2016 - 6
Construction Today - September 2016 - 7
Construction Today - September 2016 - 8
Construction Today - September 2016 - 9
Construction Today - September 2016 - 10
Construction Today - September 2016 - 11
Construction Today - September 2016 - 12
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Construction Today - September 2016 - 15
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Construction Today - September 2016 - 40
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Construction Today - September 2016 - 47
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Construction Today - September 2016 - 58
Construction Today - September 2016 - 59
Construction Today - September 2016 - 60
Construction Today - September 2016 - 61
Construction Today - September 2016 - 62
Construction Today - September 2016 - 63
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Construction Today - September 2016 - 127
Construction Today - September 2016 - 128
Construction Today - September 2016 - Cover3
Construction Today - September 2016 - Cover4
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