[Ginja_CPA]

Hey all, not sure if you have seen the new overtime law that will go into affect this December so I thought I would share it here!

https://www.dol.gov/featured/overtime

This is just a brief description from the department of labor, but every news article is biased one way or the other.

I find this change interesting, assuming that it isn’t struck down as unconstitutional before it is actually enacted. I know some accountants that live in my area that are salaried making $30,000.00 doing tax prep and this will definitely hurt the CPA firms that refuse to give them raises.

$30,000 isn’t a lot for accountants, but in my area that is a decent salary.

What do you all think about this change?

REG: 80 (02/19/16)
AUD: 83 (04/11/16)
BEC: 78 (05/28/16)
FAR: ?

[Missy]

I'm glad. One of two things will happen, either people making under the threshhold will be working 40 hour weeks or they'll be better compensated for working 50 hour weeks. I strongly believe that NOBODY making $33k should be putting in 50+ hour weeks as a general rule.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[acamp]

Zero difference to accountants here in the Bay Area, which is unfortunate, because making 50s here is likely similar to making 30s in places with lower costs of living.

Ninja + Wiley Test Bank: [FAR - 81] [REG - 76] [BEC - 88] [AUD - 73](doh!)

Becker Videos: [AUD - 82]

California CPA

[msgolds]

I agree with MLA. Personally I think FLSA-exemption is a scam to begin with, people should be fairly compensated for the time they put in. First off, the threshold for salaried employees is extremely arbitrary to begin with due to various costs of living around the country. In the beginning of my career, I was working in gigs where I was making $55-60k (not a whole lot for the DC area), but was working around the clock. Every hour I was putting into the company was billable, but I wasn't seeing a cent more than if I had simply worked a 40-hour work week.

But what do you expect in a country whose legislative process has always tended to favor businesses over workers?

BEC - 90 PASSED
FAR - 84 PASSED
AUD - 93 PASSED
REG - 84 PASSED

I DID IT!!!!

Using Becker Self-Study

"If we were put here to carry a great weight, then the very things we hate are here to build those muscles."

[Anonymous]

DOL page that has more info and links to even more information: https://www.dol.gov/whd/overtime/final2016/

My opinion:
It would have been more useful if it was practical to have the level more scaled to the various localities, as I realize that any figure – in this case, $47k and some change – has a very different meaning in one locality and in another. As some have weighed in here, $47k in the Bay Area, DC, etc., isn't going to mean anything. On the flip-side, where I live, the median per capita income is just $15k, so a $47k minimum salary is huge (in comparison, DC's per capita income is $46.5k, so approximately the salary cap). So, this law would have been more useful had it been adjusted based on locality. However, I recognize that the practicality of implementing it locality-by-locality is daunting. My state as a whole has a per capita income of over 150% of the per capita income for my county, so even a state-by-state approach still wouldn't make it really correct for all localities.

So, overall, I think this is a good effort. It doesn't fully address the issue in higher-compensated areas, and may over-address it in lower-compensated areas, but it helps at least. It will mean that salaried positions are very rare in my region, while salaried employees are still under-paid in places like DC, NYC, and the Bay Area, but it's helping a lot of situations even if not fully addressing all of them. It will also cost businesses a lot of money and (*prepares to dodge rotten tomatoes*) will accordingly cost some jobs. But, I think it's still a good move overall.

[Mayo]

I personally don't like it, but then again I don't like minimum wage either or overtime in general, so I'm most likely in the minority here.

@mla, I feel a worker should be able to vote with their feet if they're being taken advantage of. A boss who makes you work like that is probably not a good one overall regardless of this new law. If anything it'll incentivize people to stay in a crappy company.

Plus, $30k IS a salary-like job that entails a undergrad or graduate degree many times.So these arbitrary limits make no sense to me and only serve to devalue having one or multiple degrees.

I hope this gets struck down one way or another, but it's likely we're stuck with it 🙁

EDIT: I should say I'm not against overtime. Actually, the 40 hr work week is something great we have in the US that most everyone takes for granted. Overall, I'm against this increasing the cap business. Same with increasing minimum wage. Why are we trying to make it more attractive to have lower paying jobs? There are other ways to help out families or individuals who struggle, but doing this is permanent and creates a ton of moral hazard.

Mayo, BBA, Macc

[Missy]

I don't see this as being an issue of good employers vs bad employers. I actually think this will hurt the very employees the DOL thinks they're helping because your backside is out the door at 5pm and if you can't handle your workload in 40 hours someone else probably can (i.e. the people like US who are online during paid working hours better buckle down and save internet surfing for lunch breaks!)

The truth is half the people considered “salaried” so they don't make overtime don't even meet the criteria to be salaried employees anyway. Its a completely misused concept to begin with.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Anonymous]

(i.e. the people like US who are online during paid working hours better buckle down and save internet surfing for lunch breaks!)

Hahahahahahaha. That caught me off guard and amused me quite a bit. 🙂 I have to admit I was happy to get into a salaried position so that I didn't feel as much like I was robbing my employer to dawdle a bit during the workday. Yes, I know some people will say that's silly anyway, but that's the way I was raised to work, and the way I prefer to work. But, being salaried, and getting here before I'm required to and staying later than required anyway, it does make me feel better about stopping to check in on here when I'm in the middle of a stressful day and just need to chill out for a minute, or going and making small-talk with my coworkers. When I was hourly, I felt like that was stealing from the company and would limit any such interruptions to the legally-allowed break periods…and truly felt guilty and miserable if they extended past that. So…I wouldn't want to return to hourly – even though I'd get paid overtime for the extra time I worked, I'd also go back to being my own slave-driver, and I didn't like that. 😐

The truth is half the people considered “salaried” so they don't make overtime don't even meet the criteria to be salaried employees anyway. Its a completely misused concept to begin with.

I think this is the much bigger issue that needs to be addressed. If the salaries rules were more properly enforced and/or more properly crafted, then this wouldn't be such an issue. I've seen people salaried that never should have been, and because they were in a lower-tier job that didn't really qualify by the requirements it also didn't have pay that really should have been salaried, and that's where the abuse of the system is the worst. You don't have to really set a minimum for the salary for a president of an org, but IMO an entry-level employee in an organization shouldn't be salaried, and that's where the issues are (like brand-new grads in public accounting – it requires a degree, but is an entry-level job).

[MaLoTu]

It is geared towards helping people who are in lower income brackets (not really geared towards people in professional services like accountants and lawyers), but unfortunately it will likely just create a wider division.

On the news they were stating how fast food managers are usually paid salary and have to work more than an average work week which results in them being paid little, if any, above those they supervise.

The unfortunate consequence and the way the industry is going with or without this legislation is automation. Many fast food restaurants are already implementing kiosks and self service ordering systems. It is hard to imagine that someone who is salaried at <30k a year providing a service that is not easily outsourced or automated (there are some, but far and wide that comment should hold water). So, in the end lower waged salaried employees may find themselves without work at all (and like I mentioned not solely because of the law).

Overall, by the time something needs legislating it is already too out of hand to fix by any legislation!

[Anonymous]

Mayo are you arguing that people who work in minimum wage jobs do not work as hard as those in higher wage jobs?

So where's this giant list of how “hard” the job is that links it to the wage. Cause I thought it was the result of any number of confounding variables, supply and demand being one.

[Anonymous]

I live in an area where the staff and senior accountant positions are exactly in the target zone. Starting staff positions here pay from about $35-43K depending on private, public, size of company, etc. We don't have Big 4, but we do have some big regional firms: It'll be really interesting to see what they do. Then we have several smaller local firms where wages are lower but still better than most industry jobs. It's completely feasible that larger firms will stay salary based, but smaller firms might have to go to hourly. It could change our whole local accounting economy, or give new grads some interesting things to consider.

In my manufacturing company, we truly value work life balance and family. People generally take vacations, take longer lunches for appointments or events, leave on time, etc. It pretty rare for the accounting department to work more than 40 hours. Our wages are middle of the road, which is still fairly significantly under the new salary threshold. If we move wages up to the threshold, we're suddenly matching the top paying jobs in the community, which is not our strategy. So, we're going to have people who go from currently being salary to punching a clock and being overtime eligible, because we can't give them a 20% raise, and they don't really work overtime anyway. I'm worried about how affected employees will perceive the change. I suspect they'll be upset at loss of flexibility and “status”. But so far as I can tell, unless they want to go to public accounting and work 60hr busy season weeks, then it looks like that'll be the local situation and the choice accountants will make the first 1-4yrs of their career.

I also think it possibly increases the value of CPA in areas like mine. As a manager, I'm going to have employees under the threshold and over the threshold, so CPA will help me more easily delineate which employees are going to fall where. Otherwise, it's not really fair from an HR perspective to have one as hourly and one as salary, unless there's a specific reason like CPA differentiation.

[Mayo]

“Mayo are you arguing that people who work in minimum wage jobs do not work as hard as those in higher wage jobs? “

No, I'm arguing they are not as highly skilled, hence their low pay. Minimum wage jobs suck. A lot. I know because I did my fair share of them. I also think that increasing the minimum wage is a very bad idea. We live in a society that more and more values highly skilled labor, and the pain some people are feeling is due to a gradual transition in our economy from lower skilled jobs to medium and highly skilled jobs.

Increasing minimum wage only serves to stop that transition by making minimum wage jobs more desirable. Which basically means you have an incentive to stay in that job. Which just makes the whole problem of too much low skilled labor worse.

Personally, minimum wage doesn't affect me one bit. But it IS worrisome that there is so much support for a $15 minimum wage increase. This is just ludicrous to me. There is no way a 16 year old grocery store bagger has skills that are worth $15 an hour. I know because my first job was making $5.15 minimum wage as a 16 year old bagger. I probably was worth a bit less than that to be honest.

Mayo, BBA, Macc

[MaLoTu]

Mayo – my guess is that $15 will become the new $5.15 … Everything will become proportionately more expensive. Furthermore, workers who make $15 an hour will have to be bumped up and it just snowballs from there. I am more against a minimum wage increase than the law in question here. But both only exponentiate the divide of the wealthy and the poor. The wealthier will have even more incentive to outsource and automate, putting more money in their pockets and taking money from those who depend on lower skilled jobs.

[Mayo]

“The wealthier will have even more incentive to outsource and automate, putting more money in their pockets and taking money from those who depend on lower skilled jobs”

Why do you assume this is the wealthy? Automation definitely helps small business a ton as well, depending on the automation and the specifics of the business.

Mayo, BBA, Macc

[MaLoTu]

Well, yes but either way it hurts the people who do the lower skilled labor.

[Mayo]

“Well, yes but either way it hurts the people who do the lower skilled labor”

I don't see that as a reason for a business to not automate. That's like saying we shouldn't use calculators because that employs grocery store clerks who will stand behind the cashier and manually add up all the items being bought.

Or make all office equipment by hand because the factory machines cause less factory workers to be employed. Better yet, let's just employ skilled artisans to make office chairs because the wage is higher for them if you do it that way.

Businesses are in business to do well as a business. Not for the purpose of employing people. If they didn't have to they wouldn't. I feel like I'm in this weird twilight dimension where people are not taking the CPA exam and do not understand how important profit margins and reducing expenses are to a small, medium or big business.

All that is besides the point. Won't automation just make items cheaper and the service better? Doesn't this actually help the lower income people? If you didn't want automation, I guess we can go back to lower pay for minimum wage…and thus coming back full circle.

Not trying to be nasty; I'm just disagreeing with your points. 🙂

Mayo, BBA, Macc

[Author]

Replies