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Diverse
Labor Laws Challenge the Nation’s Business
Alexandria,
Va. (September 1, 2006) — As
Americans celebrate Labor Day, the nation's labor laws have evolved into a
patchwork of diverse state and local requirements including specific
mandates about wages and benefits. Employers must comply with more than
the federal minimum wage rate. Today, more than 20 states have minimum
wage rates set higher than the federal level, all with different rules,
and there are also city ordinances that set wage levels and mandate
benefits. Businesses also must also comply with complex federal
regulations concerning wages that are defined by the Fair Labor Standards
Act (FLSA). For
small businesses, compliance can be a major challenge — even greater as
they grow their businesses across state lines. Help is at hand for those
that work with a professional employer organization (PEO), a comprehensive
human resource outsource solution. The PEO relationship involves a
contractual allocation and sharing of employer responsibilities between
the PEO and the client. The PEO pays wages and employment taxes for
workers with its business clients. The PEO monitors wage and hour
regulations and advises clients about new requirements they must meet. "A
business owner is hard pressed to stay on top of federal employment
regulations and the divergent wage and hour laws in all its markets.
However, failure to comply can have costly ramifications," said Milan
P. Yager, executive vice president of the National Association of
Professional Employer Organizations (NAPEO). "With a PEO monitoring
these laws and how they apply to its clients, the business owner can rest
assured that compliance is well managed." Laboring
On — The FairPay Overtime Initiative
Consider
the business owner's challenge to understand the relatively new rules
about overtime. In August 2004, the DOL's FairPay Overtime Regulations
took effect, changing the rules as to how workers are treated for overtime
and the minimum wage requirements. Generally, FairPay rules require
workers earning less than $23,660 per year — or $455 per week — to
receive overtime protection. The DOL's new regulations included new rules
for executive, administrative, professional and computer employees who may
be exempt from these requirements. While certain aspects of the new rules
might have passed under the radar of many small businesses, PEOs helped
ensure that their clients were aware and in compliance with the
requirements. Laboring
for More — Higher Minimum Wage Often Set by States
After
several legislative efforts to change it, the federal minimum wage remains
$5.15 an hour. However, over 20 states have higher minimum wage
requirements for employers with workers in those states. State minimum
wage laws change more frequently, depending on legislative activity. As
with the federal minimum wage, states require employers to post these
state minimum wage requirements in their workplaces. Non-wage
related rules also can vary. For example, California requires an employer
to pay an employee a penalty hour when the employee does not receive the
required 10-minute break for each four-hour work period or major fraction
of such a period. The law also requires a 30-minute meal period for a work
period of more than five hours. Washington also requires a 10-minute break
for each four-hour work period and no employee may be required to work
more than three hours without a 10-minute break. A
business owner confronted with such diverse and complex regulations can
breathe more easily when the PEO is helping with compliance. A PEO can
provide the professional advice and proactive practices that improve a
business's compliance and create a better workplace. While this support
will not provide ironclad guarantees against errors, it will help to
minimize the potential. PEOs also enable their business clients to
cost-effectively outsource the management of employee benefits and
workers' compensation. For
more information on PEOs and the PEO industry, visit NAPEO's Web site: www.napeo.org.
To learn more about the FLSA and the DOL's FairPay Overtime Initiative, go
to www.dol.gov. NAPEO,
the National Association of Professional Employer Organizations, is the
recognized "Voice of the PEO Industry.®" NAPEO has
350 PEO members found in all 50 states, representing more than 70 percent
of the revenues of the $51 billion PEO industry. PEOs enable clients to
cost-effectively outsource the management of human resources, employee
benefits, payroll and workers' compensation. PEO clients focus on their
core competencies to maintain and grow their bottom line. To learn more
about the PEO industry and how PEOs contribute to small businesses'
success, visit the NAPEO Web site: www.napeo.org.
NAPEO is located at 901 N. Pitt St., Suite 150, Alexandria, VA 22314;
phone, (703) 836-0466. |