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Two New Obama Programs

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    Two New Obama Programs

    Best of our understanding for the programs described below. First of all, this is NOT a political commentary on whether we like or dislike Obama's agenda - not intending to start a political blog. Simply put, these are areas which will impact payroll programs and W-2s. Many of us in the tax business are placed in situations where we have to interpret W-2s, and many of us actually provide payroll services to our clients.

    First is a presidential edict on Labor Day regarding sick leave. Employers must now grant sick leave up to 7 days annually - what's more it is my understanding that these cannot be "use it or lose it days" i.e. unused sick leave may be carried over to the next year, thus invoking accrual basis expense for unpaid sick leave (much the same as for vacation). Effective January 1.

    Next is something as recent as last week - not a presidential edict but a directive to the Secretary of Labor to write DOL regulations which place a minimum salary level whereby employers can designate someone as being "exempt" from overtime. The current status quo is an employer can today call a person a "manager" or give a prestigious job title in order to avoid paying overtime, but the pay structure is still so low as to work a guy until he is ready to drop for only 40 hours pay. I've heard this minimum salary level is right at $47,000. Effective December 1.

    My post is to invite comments correcting me if I'm wrong, and give other amplications on the information given that will be helpful. For example, the first item may or may not lead to another code in box 12, 13 or 14 of the W-2, although vacation is not currently disclosed in either box. Box 13 contains a check-mark for sick pay, which could now be grossly misleading since I believe this is third-party payments by insurance companies.

    If my information above is correct, I believe the first item will significantly alter payroll computations and accrual-based accounting, whereas the second item will simply bloat W-2s. Regardless of what we may hear, another party or administration is not likely to block or rescind these actions, since it will adversely affect so many working people.
    Last edited by Nashville; 05-18-2016, 03:09 PM.

    #2
    There are both new to me. However, I see that the one about Sick Leave only applies to companies that work with the Federal Government.




    The overtime thing is interesting (Biden is speaking about it Live, right now ... you need to scroll to the last portion of the audio/video because it is now being recorded Live).

    President Obama announced that the Department of Labor will expand overtime pay to millions of American workers.

    Comment


      #3
      I wouldn't expect either to show up on the W-2. I just don't see any purpose for it. Why would the overtime change expanding overtime pay to more employees be any different for reporting purposes than those already covered by overtime laws? Same with sick pay. I suppose the employer can put anything they want in box 14, so they could if they so wanted put something in there.

      Comment


        #4
        There was already a lower limit in place for salary employees, but it was something like 23K. While well intentioned, my guess is most employers will change the workers to an hourly wage where they will end up making less than they currently do. It was open to public comments several months ago. I didn't read the comment, but find it hard to believe that none of the comments didn't figure out what will happen.

        I do wonder if it also applies to employee/shareholders in a S.
        Last edited by kathyc2; 05-18-2016, 04:31 PM.

        Comment


          #5
          Originally posted by Nashville View Post
          First is a presidential edict on Labor Day regarding sick leave. Employers must now grant sick leave up to 7 days annually - what's more it is my understanding that these cannot be "use it or lose it days" i.e. unused sick leave may be carried over to the next year, thus invoking accrual basis expense for unpaid sick leave (much the same as for vacation). Effective January 1.
          But the sick leave is only paid if the employee is actually sick, and then it just replaces regular pay, so I don't see why this would be an accrual expense. It's not like you have to pay the worker for unused sick leave when they terminate employment.

          California has had mandatory sick pay law in place since last July if my memory serves. I think they incorporated a good choice for the employer: if you grant the full year's worth of sick leave at the beginning of the year, unused amount at end of year does not need to be carried over. Only if you dribble it out one month at a time do you have to carry over the unused amount, up to a certain limit.

          I think most private employers have long ago instituted limits on total vacation time that can accrue, once the limit is reached no new vacation time accrues. Only government employees trying to spike their pensions still have the opportunity to accrue unlimited vacation. It's basically the same as allowing the employee to give themselves paid overtime (at normal pay rate), for example they could work 52 weeks and accumulate compensation for 55 weeks, without any review or approval process by the manager to authorize the overtime.
          "You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard

          Comment


            #6
            Originally posted by kathyc2 View Post
            There was already a lower limit in place for salary employees, but it was something like 23K. While well intentioned, my guess is most employers will change the workers to an hourly wage where they will end up making less than they currently do.
            That shouldn't really happen. I heard a commentator on the radio yesterday, refer to this directive as mandating "time-and-a-half" for workers. Nowhere in the DOL regulations does it say anything about a specified rate of pay. It simply says eligible employees must be paid for the hours actually worked. Time-and-a-half may be a benefit in larger corporations or as the result of bargaining agreements, but it is not a mandate by the government.

            Comment


              #7
              Rule changes should be out by end oF month. Then check DOL website or currently check some of the major payroll companies articles for current info.

              Takes the guessing out of news media reports and blogs.
              Last edited by TAXNJ; 05-20-2016, 03:27 PM.
              Always cite your source for support to defend your opinion

              Comment


                #8
                Free webinar on the new OT laws

                Here's a link to a webinar I signed up for.....this isn't a 'recommendation' as to the quality of the webinar as I haven't attended one by these guys. It may be more of a sales pitch.

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