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Is your COA or HOA Prepared for the New Overtime Rules?

If your COA or HOA employs managers, recreational employees or maintenance personnel, you are affected by the new FLSA changes that went to effect December 1, 2016.

FLSA stands for Fair Labor Standards Act as administered by the U.S. Department of Labor. The FLSA establishes the minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees.

On December 1, a new overtime rule went into effect that could have an impact on most community associations. Here’s more about the rule and how to comply, avoiding any potential penalties.

The U.S. Department of Labor updated the overtime rule which determines whether an employee is eligible for overtime. Under the new rule, only those employees making a salary of $47,476.00 or greater can be exempt from overtime. (Under the old rule, the salary amount was $23,400.)

Those with compensation under $47,476.00 need to be paid overtime for any weekly hours more than 40 hours.

Besides the salary criteria, the Department of Labor also looks at the employee’s duties:

TYPE: EXECUTIVE
SALARY BASIS TEST: Employee must be paid on a salary basis
STANDARD SALARY LEVEL TEST: $47,476/year ($913/week)
STANDARD DUTIES TEST: The employee’s “primary duty” must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise (and managing 2 full-time employees as well.)

TYPE: ADMINISTRATIVE
SALARY BASIS TEST: Employee must be paid on a salary or fee basis
STANDARD SALARY LEVEL TEST: $47,476/year ($913/week)
STANDARD DUTIES TEST: The employee’s “primary duty” must include the exercise of discretion and independent judgment on matters of significance.

TYPE: PROFESSIONAL
SALARY BASIS TEST: Employee must be paid on a salary or fee basis
STANDARD SALARY LEVEL TEST: $47,476/year ($913/week)
STANDARD DUTIES TEST: The employee’s “primary duty” must be to primarily perform work that requires advanced knowledge in a field of science or learning or that requires invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

Typically, Associations would only have either EXECUTIVE or ADMINISTRATIVE positions as defined above.

The mean salary for Community Association Managers is $55,000 per year, per the U.S. Bureau of Labor Statistics. If you are paying less your Association Manager less than $47,476, they will be eligible for overtime under these new rules.

Note that the above information is intended as a guideline. Additional requirements may apply to your Association. Consult your accountant and attorney to make sure you’re in compliance. Assess your current employees to see whether they meet the criteria. As needed, meet individually with each of the employees to explain any changes to their roles and time-keeping systems.

LM Funding provides funding solutions to condo and homeowner associations (COAs & HOAs) to recover delinquent association dues and guaranty future association budgets using proprietary technology.