All posts by Judi Otton

Ready for the new FLSA Changes?

dreamstime_s_4224551You may have heard recently the overtime regulations based on the Fair Labor Standards Act have changed.  You may also have wondered “what does this mean for me”?  Well, I’m here to tell you.

First of all a little background:  This act defines who is and is not entitled to overtime wages when working more than 40 hours per week.  Employees can qualify as “Exempt” from the act for a variety of reasons, but they are not exempt just because they are paid a salary (as opposed to hourly).

In order for an employee to be classified as exempt, his or her job must pass three tests. The employee must:

  • Be paid at least the minimum weekly or yearly dollar amount as mandated by the Dept. of Labor.
  • Be paid on a salary basis.
  • Perform specific job duties.

These specific exempt job duties are broken into five classifications:

  • Executive – Executive job duties must include supervision of 2 or more employees and input on personnel decisions such as hiring, work duties or promotions.
  • Professional – Professional job duties include well educated specialists like attorneys, doctors, teachers, architects, accountants and nurses.
  • Administrative – Administrative job duties must require an exercise of discretion and judgment with the authority to make independent business decisions without immediate supervision. For example, human resource, finance, payroll, marketing and advertising professionals are all generally exempt. Your administrative assistant probably is not.
  • Outside sales – outside sales professionals whose primary job duties are sales conducted outside of the office are exempted.
  • Some computer related jobs – Computer related job duties need to include performance of high level work that involves significant decision making. Examples could include the duties of network, internet and database administrators.

In addition to these five classifications, employees that are “Highly Compensated” can be exempted even if they don’t pass the duties test.

The changes just signed into law and taking effect on December 1, 2016 have adjusted the salary thresholds for all exempt positions and the Highly Compensated exemption.  The standard threshold for exempt employees has risen to $47,476 from $23,660, so this means that in order to qualify to be exempt from the FLSA an employee must make at least $47,476 per year.  The threshold for Highly Compensated individuals has risen to $134,004 from $100,000.  In addition, benchmarks have been set to adjust both of these thresholds for inflation.

One important note, the Department of Labor expects written justification of an Exempt classification.  If investigated, the Department of Labor will be looking for your Compliance Plan.  Within it should be a stated policy and workflows that outline how you arrive at Exempt or Non-Exempt classification decisions.  When in doubt, the DOL has workflows tools online to answer any gray areas:  Visit http://www.dol.gov/elaws/esa/flsa/overtime/menu.htm.  Failure to pay overtime could result in 2-3 years of back pay per affected employee plus back payroll taxes and fines.  This is an expensive mistake to make!

So now finally, what does this mean to you?  If you have employees that have been classified as exempt that do not meet the minimum salary threshold ($47,476/year), or if you have employees that you were relying on the Highly Compensated Employee exception for exemption that are making less than $134,004/year you have three options:

  • Raise their salary to the threshold. Remember, these thresholds will now change annually so you will need to continue to keep pace.
  • Change them to salaried non-exempt. You can continue paying them salary, and will also have to pay them overtime for any hours worked over 40 in a week.  You’ll need to start tracking hours.
  • Change them to non-exempt hourly. You’ll need to start tracking hours

Some final thoughts:

Rolling this out to employees needs to be done thoughtfully.  Even though employees may now be eligible for overtime, some may take the reclassification to non-exempt as a demotion

The exemption is based on the position, not the employee.  If you have some folks classified as exempt and some as non-exempt in the same position, you’re likely to get yourself into trouble.

If you have any questions or concerns, talk to an expert.

This is a great opportunity to make sure all your employees are correctly classified.

Rock your Year!

Can't stop time!
You can’t stop time

Here we are beginning the second half of the year, and if you’re anything like me, you’re wondering where the time went.  You may also be wondering what the heck happened with your business (or personal!) goals.  Well, the good news is there’s still time to recommit.  That’s exactly what I’m doing.

For me, the dog days of summer have always been a time to take a step back and see what’s working or not working.  Here are some suggestions based on my own experience:

  • How are you performing against your budget? The good news is, there’s still plenty of time to catch up
  • Did you have any big business initiatives you have yet to accomplish? I do (more on that in a month or so!) and I’m using the slightly quieter time in the summer to jump start those initiatives.
  • How are you doing promoting yourself and your business? If you’re like me and you find speaking engagements to be effective (and fun!), now is the time to start lining them up for the fall.
  • Are you taking time for self-care? This is the one that I have the hardest time with, but for the rest of the summer, I’m not working weekends!  So, if any of you get a business email from me after 5 PM on Friday, please, PLEASE call me on it!

What are you doing to make sure you rock your year?

No Time for Forecasting?

No time for Forecasting
No time for Forecasting?

I don’t have time to worry about forecasting or budgeting

I hear from a lot of business owners that they don’t have time for forecasting or to do budgets or forecasts. I get this, I’m a busy business owner too, but that’s foolish and short sighted. But, let me ask you this – do you have time to scramble on payday to make sure there’s enough in the bank? Do you have time to waste and deliberate when you’re making a big investment? Or would you rather have the financial information to make the best decision? Do you have time to hound your customers when you really need them to pay you because you haven’t kept on top of things to start with? Do you have time to recover from making a big financial commitment that you really couldn’t afford? Do you have time to waste because you didn’t make the investment you could afford? NO? I didn’t think so!

So this is why you need to be looking ahead in your business. Yes, it takes a little time, but it saves a lot more time plus the stress and uncertainty.

I’ll tell you how I fit it in – a little at a time. Yes, it takes some time to build the initial forecast, but once that’s done (and you can get help) maintaining it is not terribly time consuming. Personally I’ve picked Friday mornings to do my “admin” work, and part of that includes updating my forecast. If you look at it weekly, and keep it up to date, it’s not a big deal. It’s also available and valid when you do need it. When you do have that big business decision to make and you’d like some insight into your financials.

Try it. And then let me know how it works for you.

7 Top Tips to Avoid Excel Errors

5395284268_d4d99151f8_oErrors in Excel spreadsheets are very common. I make them too! We’ve been hearing more and more about how much it’s costing companies here, here, here, and here.

I’ve written about using purpose specific commercial software products here, but what if you just HAVE to use Excel? Well, today, I’m going to give you a few tips on avoiding the most common Excel errors.

Design / Build / Test

Just like ‘real’ software, an Excel spreadsheet will be better designed if you take some time to do some minimal design work up front. At least for a moment, think about what you’re trying to accomplish. The data you’ll need, the data you have, the formulas you need, etc. Thinking in advance will prevent you from building something that isn’t going to suit your purpose. Or isn’t going to do it easily.

Step by Step

One technique I particularly love it building the model step by step. This means you may have some extra columns. Here’s a very simple example. If I was building something to calculate (A + B) / 3, I’d create a column that was (A + B) and then another column that takes the result of that and divides by 3. You can always combine the formulas later (be sure to keep your step by step model and check the results along the way) or hide the intermediate calculations. See below for an example.

Avoid Errors with intermediate calculations
Make intermediate calculations in Excel

Row by Row

Build your model for one row of data first. Test it, proof it, and then, and only then copy it for all data. Test it again as your data varies, but start with one row to make things simpler.

Check your Totals

One error I see commonly (and have made more than once myself!) is forgetting to extend the totals at the bottom when new rows are added. Just double click on the total, to see the range of cells included. Check this after making any major edits or adding new data. This works for any formula – you can make sure you’re using the cells you expect, by double clicking.

Another Set of Eyes

The single best way to catch errors in your spread sheet (or even in your thought process) is to explain it to someone else. This means you need a willing victim – oops – I mean collaborator, but if you can find one that will go through all the details with you do it. And then buy them lunch!

Lock it up

Another very common cause of spreadsheet errors is overwriting formulas. Before you share your spreadsheet (and even if you don’t) protect the calculated cells. It’s also a good idea to provide a visual indicator of either areas where users can and should enter data and where they should not. This is relevant even if you’re the only one using the spreadsheet.

Use your sanity

If a result seems surprising, or unexpected, question it. That’s probably good advice in any circumstance, but especially here. If you can, try to make the calculation by hand and make sure that unexpected result isn’t the result of an unexpected error.

With these tips, you’ll be much less likely to make a big Excel error, but still – be careful! And please – share your favorite tip in the comments!