The midnight oil: Department of Labor passes new federal OT rule.

AuthorFox, Jason
PositionCapitol Beat

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In May, the U.S. Department of Labor released revisions to the federal overtime regulations that increased the salary thresholds for executive, administrative and professional exemptions from $23,660 a year to $47,476 a year. The changes also allow employers to count nondiscretionary bonuses and commissions to satisfy a portion of the salary threshold, schedule automatic adjustments to the salary threshold every three years and increase the "highly compensated employee" annual salary threshold by approximately one-third.

These new regulations take effect Dec. 1. These revised regulations will impact many California businesses, as the new federal salary threshold needed to qualify for exemption from the Fair Labor Standards Act overtime requirements will exceed the minimum salary threshold required for exempt status under current California law.

While some businesses will work to absorb the additional payroll expectations, many small businesses in California will need to pay close attention to the new federal standard to ensure they are in compliance.

Employers should also be aware of the increase of minimum wage in California, which will reach $15 per hour by 2022 (2023 for small businesses).

There are some concerns regarding the impact these new regulations may have on hiring expansions, offering benefits and the ability to offer flexible working arrangements to employees. These concerns can be exacerbated due to the seasonal nature of some CPA services. Many small firms may have difficulty complying with the increased exemption threshold, while also meeting the demands of the tax season each year with the same high standards CPAs are known for.

CalCPA will continue to work with the AICPA and the other state societies as the new regulations are implemented to ensure they reflect an evolving workplace without unwittingly creating a disadvantage for small firms and businesses throughout California.

CalCPA Opposes Change to Income Tax Appeals Process

At the end of the budget hearing deadlines, CalCPA opposed a last-minute attempt to insert a major policy change into a budget trailer bill. This amendment would have allowed the FTB to bring a trial de nono proceeding in superior court after the Board of Equalization had ruled in the taxpayer's favor in the initial hearing.

CalCPA has successfully opposed this issue in the past when it has been attempted.

CalCPA and a coalition of other pro- business groups submitted...

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