Tag

compliance

Jul 23

Why a strong HR department improves your nonprofit

By Sponsor Insight

By Mike Harrington, president, The Synergy Companies

A business changes as it grows. What once was a one- or two-person shop hires more talent as new roles are created to meet daily demands. Capital rises, office space expands, and business goals are set higher and higher. Throughout it all, there is one area that can make all the difference and yet is often relegated to a lower priority. A strong HR department improves your business and has become a focus for successful organizations across America.

Alleviates unproductive multitasking

Consider an organization that doesn’t have a true HR department. There are still HR-related activities that must be completed by somebody. After all, who processes the payroll? When an employee has a problem, whom do they report it to? Who is conducting onboarding, processing hiring paperwork, or running trainings?

Despite being unrelated to an organization’s core business, HR responsibilities add up quickly for even the smallest of companies.

When a specific department doesn’t exist to carry out this function, a member of the management team often shoulders the responsibility. Unfortunately, that typically means spending the time he or she doesn’t have and turns the focus away from business strategy to “deal” with HR duties that he or she may not have much knowledge about.

While some may get by with multitasking in this fashion because, as a smaller organization, doesn’t feel as though there are HR activities daily, it results in a compromise of HR’s ability to add to and improve the nonprofit.

Dedicated, expert HR professionals create a strong HR department because their focus is solely on human resources. While some days like payday may see a flurry of HR activity, other “slower” HR days are the times this department can focus on improving the workforce, environment and culture. Abstaining from implementing a true HR department prohibits a company from reaching its full potential.

Minimizes risk and liability

Each passing day seems to produce a new law or regulation that organizations like yours must comply with. Even the smallest nonprofits have to address complex legislation, making sure they remain in compliance with applicable rules. A strong HR department is an organization’s leader in these efforts. There are payroll, tax law, employment law, benefits administration, disability, hiring, firing and training considerations among a number of others that must be appropriately taken care of. While some of it may feel like bureaucratic paperwork, that doesn’t change the fact that one false move can cause significant issues.

Consider just one piece of this in the topic of harassment and discrimination, a hot-button issue surrounding today’s workplace. When an organization has robust training for all employees in these areas, their liabilities are greatly reduced. The workforce understands exactly what constitutes a violation and how to respond if they witness one. Management knows precisely what to do if they are presented with a claim. Instances of harassment and discrimination can drop sharply. Even if they do occur, when an organization follows all the right steps in addressing and reporting them, they clear themselves of a great deal of liability.

When nearly 20 percent of U.S. adults have been sexually harassed at work, taking the right measures is key. The legal implications are similar for several other areas and, to be addressed appropriately, require a strong HR department.

Improves Employee Engagement and Retention

HR is the internal face of your organization. When the department operates at subpar levels, or if someone without HR expertise is trying to run these activities on the side, it deteriorates the employee experience and negatively affects culture. If employees encounter HR disorganization and confusion, or if they have to wait weeks for answers to common HR questions, it will lower their engagement.

At a time when 87 percent of organizations cite culture and engagement as a top challenge, it’s clear that employees depend on a strong HR resource. When they have a question or concern, they need to know who to go to and expect rapid resolution. Above all, they must be able to trust their HR person. If the onboarding experience is streamlined, paperwork is void of mistakes, and company trainings are professional and helpful, that trust is built. When HR thrives, your employees thrive as well, and that can make all the difference in keeping them happy.

Why a strong HR department improves your business

While the need for a strong HR department is clear, there’s no sugarcoating the fact it can be a difficult and costly overhaul process. For small nonprofits in particular, the cost of hiring HR employees may be prohibitive. Those in this position often find that a PEO like Synergy is an effective and affordable answer. In fact, businesses that partner with a PEO grow 7-9 percent faster and are 50 percent less likely to go out of business. At the end of the day, whether through a PEO or on your own, your HR department will determine just how far your business will succeed.

Mike Harrington is the president of The Synergy Companies. Joining the organization in 1995, Harrington has held several leadership roles within the company working to ensure its effective delivery of human resource and PEO services. Prior to joining Synergy, he spent five years with Safeguard Business Systems in direct sales and sales training and support. Harrington holds a BS degree in marketing from Eastern Illinois University.

When you’re looking for HR expertise that can provide a boost to your company, look no further. Synergy is here for you.

 

Aug 15

New overtime rules: Got compliance?

By Sponsor Insight

By Jeremy York, Human Resources field representative, Synergy PEO Services

Last year, the Department of Labor (DOL) announced proposed changes to the Fair Labor Standards Act (FLSA), the law that outlines overtime exemptions for workers.

These proposed changes will extend overtime protections to nearly five million workers by making many positions previously considered overtime exempt under the Act, nonexempt and eligible for overtime.

After 10 months of review, the final rule was published in May.

Overview

The final rule focuses on updating the salary and compensation levels needed for executive, administrative and professional workers in order to be exempt.

Specifically, the rule:

  • Changes the standard salary level from $455 per week or $23,660 annually to $913 per week or $47,476 annually; meaning that employees must make at minimum the standard salary level to be classified as exempt.
  • Sets the total annual compensation requirement for highly compensated employees (HCE) subject to the duties test to $134,004.
  • Establishes a mechanism to automatically update the salary and compensation levels every three years to align with cost of living etc.
  • 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.

Employers have until this Dec. 1 to comply with the final rule. This means that in order to be exempt from overtime, employees must make a minimum salary of $47,476 and satisfy the duties test outlined by the DOL for exemption from overtime (see table below). Employees who do not meet these criteria must be classified as nonexempt and paid overtime for any hours worked over 40 hours per week.

Basic requirements for claiming an exemption under the standard duties test

  Executive Administrative Professional
Salary Basis Test ·   Employee must be paid a salary, not hourly ·   Employee must be paid a salary, not hourly ·   Employee must be paid a salary, not hourly
Standard Salary Level Test ·   $913 per week ($47,476 per year for a full-year worker) ·   $913 per week ($47,476 per year for a full-year worker)

 

·   Special salary level for certain academic administrative personnel

 ·   $913 per week ($47,476 per year for a full-year worker)

 

·   Salary level test does not apply to doctors, lawyers or teachers
Standard Duties Test ·   The employee’s “primary duty” must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise and managing two fulltime employees,

 

·   Additional requirements provided in Section 29 CFR 541 Subpart B

 ·   The employee’s “primary duty” must include the exercise of discretion and independent judgment with respect to matters of significance.

 

·   Additional requirements provided in Section 29 CFR 541 Subpart

 ·   The employee’s “primary duty” must be to primarily perform work that either requires advanced knowledge in a field of science or learning or that requires invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

 

·   Additional requirements provided in Section 29 CFR 541 Subpart D

 

Special note for nonprofits

Nonprofit organizations have been identified as a sector that is most significantly impacted by these changes given their limited budgets and other financial factors.

The DOL recognized this and published a special overview and guidance for nonprofit organizations outlining how the FLSA applies to nonprofits:

  • Enterprise coverage: All employees of an organization will be covered by the FLSA and overtime regulations, if the entity has annual revenues of at least $500,000, measured by volume of sales made or business done (See the guidance document for more detail.).
  • Individual coverage: If the employer does not meet the standard for “enterprise coverage,” an individual employee will be covered by the FLSA if he or she engages in interstate commerce or in the production of goods and services for interstate commerce. This can include such regular activities like making out-of-state phone calls, receiving and sending mail or email, ordering goods from out-of-state suppliers (such as Amazon) and handling credit card transactions.

While some nonprofits may not be covered under the FLSA, it is likely that many employees of nonprofits are entitled to FLSA protections.

The DOL’s guidance document also outlines several options for nonprofits on how to address these changes. These options include:

  • Raise salaries: For workers whose salaries are near the new salary standard and meet the duties test, the organization can raise their salaries to meet the new standard and maintain the employees’ exempt status.
  • Pay overtime above a salary: Pay newly overtime-eligible employees a salary and pay overtime for hours in excess of 40 per week. The law does not require that newly overtime-eligible workers be converted to hourly pay status only from exempt to nonexempt.
  • Evaluate and realign employee workload: Limit overtime by ensuring workloads are distributed to minimize overtime and that staffing levels are appropriate for the workload.
  • Adjust employees’ base pay and pay overtime: Adjust the amount of an employee’s earnings to reallocate it between regular rate of pay and overtime compensation. This method works for employees who work a relatively small amount of predictable overtime. Example: Assume a fundraising supervisor at a nonprofit who satisfies the duties test for the executive exemption earns $37,000 per year ($711.54 per week). The supervisor regularly works 45 hours per week. The employer may choose to instead pay the employee an hourly rate of $15 and pay time and a half for the five overtime hours worked each week, keeping their annual compensation liability for this employee at $37,000 annually.

Compliance

To meet the Dec. 1 compliance deadline, organizations will need to craft a compliance strategy and review internal practices.

Currently, Synergy is working with its clients to:

  • Conduct FLSA audits to identify which positions are impacted by the final rule.
  • Develop actions plans for how to implement the new changes.
  • Identify methods to reduce overtime for those roles that were previously exempt from it.
  • Understand how these changes may impact company culture and employee morale.

Navigating through these changes can be challenging and even overwhelming. Therefore, it is recommended that you secure an HR partner that can assist in working through these changes. Utilize the right expertise to keep you compliant and to avoid legal action.

JeremyYork Jeremy York, SPHR, SHRM-SCP, is a Human Resources Field Representative for Synergy PEO Services. He provides strategic and generalist HR support to local nonprofit organization leaders and their staffs. York has over 15 years of human resources experience working as a consultant, director of human resources, and generalist, in the insurance, healthcare, nonprofit, PEO, and other industries.