UACPA Assesses Impact of New DOL Overtime Rule
Thursday, May 26, 2016
Posted by: Amy Spencer
The Utah Association of Certified Public Accountants
Assess Impact of New DOL Overtime Rule
SALT LAKE CITY, May 27, 2016 -- On May 18 The U.S. Department of Labor (DOL) released a final rule amending the requirements for overtime pay that would dramatically increase the salary thresholds for exemption for CPA firms and other businesses here in Utah and throughout the nation.
Under the FLSA, employees who work more than 40 hours in a week are entitled to overtime pay, unless they meet the requirements of one of wage level and duties tests. The new rule doubles the minimum salary threshold from $23,660 to $47,476 annually and raises the exemption level for what are considered “highly compensated employees” from $100,000 to $134,004 annual salary. DOL estimates that this rule change will directly impact some 4.2 million workers across the United States not currently eligible for overtime and may reclassify an additional 8.9 million salaried workers as nonexempt.
Businesses nationwide are assessing the effects of the new overtime-pay rule, with many companies saying the regulation will lead them to reduce workers’ hours, cut benefits, or limit flexible office arrangements. Companies will have until December 1, 2016, to make determinations on which employees to reclassify as nonexempt and implement the changes.
In Utah, CPA firms and clients alike are expressing concern about the rule’s impact.
“The rule may be well-intentioned, but is likely to have unintended consequences,” said Susan Speirs, CPA and CEO of the Utah Association of CPAs (UACPA). “Expanding the pool of overtime-eligible employees will force firms and companies to resort to cost-saving measures to maintain current payroll levels. The Labor Department received 270,000 public comments on its proposal, many from employers who believe the rule will force them to cap workers’ hours, slow the hiring of full-time employees, and shift salaried workers to hourly schedules.”
While most accounting firms will work to absorb the additional payroll expectations, the overtime rule will have a significant negative impact on smaller accounting firms. Of particular concern, are the impacts the change in overtime has on major decisions such as hiring, expansion, the offering of benefits, and the ability to offer flexible working arrangements. Further, DOL does not take into consideration the seasonal nature of the accounting profession, nor the numerous small firms that are unable to increase the salaries of their employees to comply with the exemption threshold, while also meeting the demands of tax season each year.
In a statement released after the rule was issued, American Institute of CPAs’ (AICPA) President and CEO Barry C. Melancon, CPA, CGMA, said, “The proposed revisions fail to modernize or streamline the regulations, are not reflective of the realities of the modern workplace and a changing workforce, and would adversely affect both employees and employers. DOL’s modifications to the rule did little to lessen the likelihood that CPA firms and countless other businesses will be forced to curtail hiring — and may even have to reduce the size of their workforce.”
The UACPA will work with the AICPA to urge Congress to intervene in the process so that regulations governing overtime pay reflect the evolving workplace in a manner that is not economically counterproductive.
About the UACPA
The UACPA is a non-profit professional organization for Certified Public Accountants in Utah. It serves as a resource for training, professional networking, professional advocacy, job opportunities and technical support for its members. The UACPA is located at 136 S. Main Street, Suite 510, Salt Lake City, UT 84101. For more information call 801-466-8022 or visit www.uacpa.org.
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