Change in Overtime Rules Finalized

Late last year we posted that the Department of Labor had delayed some significant changes to the FLSA overtime rules. They have now finalized those changes and they are set to take effect on December 1, 2016.  The full details of the changes can be found on the DOL’s website (https://www.dol.gov/whd/overtime/final2016/).

The biggest change of note for our clients is that there is a significant increase in the threshold salary for an employee to be eligible for the “white collar” exemptions from overtime.  This salary increased from $23,600 to $47,476.  This essentially means that regardless of position, management responsibilities, duties, etc., if employees do not make more than this threshold salary, they cannot be exempt from being paid overtime, even if they otherwise satisfy the white collar exemptions.  Additional information about the white collar exemptions can be found at: https://www.dol.gov/whd/overtime/fs17a_overview.htm.

One important aspect of the revised threshold salary to keep in mind is that ministers will remain exempt from overtime under the “clergy and religious workers” exemption.

Should your church have any questions about these new rules or should you want to consult with someone more specifically about how the revised rules impact your church, please contact our in house attorney Jared Hodge at 317-900-7024 or jared@churchshield.com.

Below is a link to a blog posted by our HR partner, THinkHR, that discusses the changes in greater detail.  If you would like more information on our HR services, please contact Amber Bechtel at hr@churchshield.com.

https://www.thinkhr.com/blog/hr/its-finally-here-dol-releases-the-new-flsa-white-collar-overtime-exemption-rules

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Change in Overtime Rules – Delayed

Earlier this summer the Department of Labor indicated that it would increase the minimum salary requirement for what are often referred to as the white-collar exemptions from overtime compensation.  These exemptions allow employees to not pay overtime to certain employees whom are considered Executive, Administrative, or Professional.  (http://www.dol.gov/whd/overtime/fs17a_overview.htm)

The current minimum salary requirement for these exemptions is $455 per week or $23,660 annually.  The revised number that was to start around the beginning of 2016 is proposed at $970 per week or $50,440 annually.

This change has now been delayed until late 2016. That doesn’t mean employers shouldn’t start preparing for the change now.  If you would like more information, feel free to contact our offices.  You can also find further information at the following link: http://www.dol.gov/whd/overtime/NPRM2015/faq.htm

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Employees vs. Independent Contractors

This summer the U.S. Department of Labor (DOL) issued Administrator’s Interpretation No. 2015-1, which discussed misclassification of employees as independent contractors.  Federal and state governments are beginning to take more initiative to investigate employers and businesses that wrongly classify their employees as contractors to avoid payroll tax.

There are a number of factors that employers should take into consideration when determining the status of their workers. One of the tests that employers should consider is the IRS 20 Common Law Factors Test. In the Administrator’s Interpretation No. 2015-1, issued in July, the DOL has narrowed the definition of independent contractor by also focusing on how economically dependent a worker is on their employer or in business with themselves.  They encourage employers to also look at the Fair Labor Standards Act (FLSA) Economic Realities Test.

It is also important for employers to be aware of classification factors that are specific to their state. ChurchShield offers our payroll clients a Human Resource Knowledge Base option that gives our clients access to the latest rules and regulations for employee classification, as well as, an Independent Contractor Classification Assessment tool. The HR Knowledge Base system can help keep clients from exposing themselves to unexpected liabilities and penalties.

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New Credit Cards, Fraud/Liability, and Responsibility

To combat the problem of credit card fraud, credit card issuers in the US are now adopting the use of EMV or chip cards; the same type of credit cards currently used in almost every other country worldwide.  Instead of having the common magnetic strip which contains unchanging data, the EMV cards contain a computer chip embedded into each card.  These chips create a unique transaction code with every use which makes fraudulent activity much less likely.  The new EMV cards will consequently require new devices to read them.

Other than the need for new technology to read the EMV card, the important change to note is that in the past, the banks issuing the credit cards have been responsible for any fraudulent use of the cards.  With the new cards, stating October 1, if fraud can be traced back to an outdated reader, the liability will fall on the church, not the bank.

If you have not obtained an updated reader or are unsure if you are compliant, we suggest you contact your credit card processor and follow-up with them on how to obtain updated readers.   Costs vary for the new readers but the cost of not obtaining one may end up being more costly.

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Can my church legally show the Super B*wl?

This is a re-port of a post from last year, but with the Super Bowl coming up this weekend, we thought it appropriate to post it again.

In short, yes, but there are stipulations.  First off, it’s probably best to avoid the use of the term “Super Bowl” as it is protected trademark of the NFL.  Secondly, a church should only use equipment that it uses on an ongoing basis for ministry purposes(i.e. don’t rent anything) and must show the event “live.”  Lastly, the church shouldn’t charge admission.  The NFL has stated that they are OK with churches taking donations to defray cost, but admission charges are not permitted.

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2014 Standard Mileage Rates

2014 Standard Mileage Rates

The IRS has announced the standard mileage rates will go down slightly in 2014. Below are the new mileage rates starting 1/1/14:

Business use of a vehicle– 56 cents per mile
Medical and moving miles –23.5 cents per mile
Charitable miles – 14 cents per mile (unchanged from 2013)

http://www.journalofaccountancy.com/News/20139210.htm

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The Start Of Tax Season Will Be Delayed Next Year

The start of the 2014 tax filing season will be delayed up to 2 weeks due to the recent government shutdown.  The filing due date, however, will not be not be pushed back and will remain April 15, 2014.  More information about when the start of filing season will be should be available in December.

http://www.forbes.com/sites/kellyphillipserb/2013/10/22/irs-announces-delayed-start-to-2014-tax-season/

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October 15th Tax Deadline Two Weeks Away

If you have yet to file your 2012 tax return, the extended deadline to file your personal tax return (form 1040) is October 15th.  Keep in mind that for the October 15th deadline to be valid, a taxpayer must have timely filed an extension (form 4868) prior to the first deadline of April 15th.  If you are unsure if you have timely filed an extension, it would be best file your tax return sooner than later.

Note on state tax returns:  Most (but not all) extended state tax deadlines will have passed by October 15th.

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October 1 Deadline for Healthcare Exchange Notices

Under the Affordable Care Act (“Obamacare”), a church may have to notify its employees about the state-run insurance exchanges that will debut sometime in 2014. This requirement applies to all employers who are subject to the Fair Labor Standards Act (“FLSA”). Specifically, the notice must inform employees as to:

  • The existence of the exchange and a description of the services provided by the exchange;
  • The employee’s potential eligibility for subsidized coverage on the exchange if the employer’s group health plan doesn’t provide “minimum value” (i.e., the plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs); and
  • The fact that the employee may lose the employer contribution (if any) toward health insurance coverage if he or she chooses to purchase individual coverage on the exchange.

To assist employers, the DOL has issued two “model” notices. One is for employers that sponsor a group health insurance plan and the other is for those that don’t.  See the model notices at the links below:

http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf

You may need help filling out these notices.  We recommend that you contact your insurance agent or benefits coordinator to obtain this assistance as they should be informed of the benefits provided by your plan.

At this point, you may be asking yourself, “Is my church subject to FLSA”?  This is a difficult question to answer without knowing the specifics of your situation.   Churches are not automatically exempt from FLSA, and can easily be subjected to the law in a variety of ways.  (Here is a DOL technical release that provides more detail on the requirements of the notice: http://www.dol.gov/ebsa/newsroom/tr13-02.html )

At this time there does not seem to be any financial penalty for failure to comply with this requirement, however, there is also no harm in sending out the notification, regardless of whether you are required to do so.  It is our opinion that it is easier to comply than to split hairs over a potential exemption and then worry about any future ramifications of non-compliance.

Please note that this is not a one-time notice.  Effective, October 1, 2013 all new hires must be given the notice within 14 days of their start date.

If you would like assistance determining if your church is exempt from FLSA, you may contact our in-house attorney (Jared O. Hodge, J.D., CPA) for consultation on the matter.  Mr. Hodge can be reached at jared@churchshieldlaw.com.

 

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More Scrutiny Over Independent Contractor Classification

Is your church properly classifying its workers as employees or independent contractors?  With the implementation of the Affordable Care Act the IRS will examine independent contractor classifications more carefully and the penalties and fees for mis-classification can sky rocket.  The determination of proper worker classification is based on who has control over that worker.  The IRS has identified 20 factors that can help you with this determination (Revenue Ruling 87-41).  However, many churches believe some of these common myths outlined in the link below.  Make sure your worker classification is not based on these myths.

http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2013/CPA/Aug/Misclassification.jsp

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