Rules for Overtime Have Changed…Nonprofits, Take Note!

Who’s been hitting the books? RBI’s Chris Smith has been, that’s who! He is always brushing up on new tax rules that will impact our amazing clients. He does the studying so he can keep you informed, up-to-date, and out of trouble with the IRS.

Here is a big change to the tax law in 2020 that impacts employers that Chris wants to share with you. Overtime rules have changed! The criteria for which employees qualify for being exempt has been updated, as of January 1, 2020.

First, let’s do a quick review about what it means to be “exempt” and “non-exempt.” If an employee qualifies to receive overtime pay, they are considered to be “non-exempt.” However, if they are not eligible to receive overtime pay, they are considered “exempt.”

Want to know if your employees will qualify as exempt or not in 2020? If so, here are the questions to ask based on two new rules from the IRS.

Here are the questions:

  1. Does your employee earn less than $684 per week ($35,568 per year)?

If your answer is no, your employee is considered to be non-exempt.

If your answer is yes, please review and answer question 2:

  1. Does your employee direct the work of 2 or more employees?

If you answer “yes” for both questions 1 and 2, your employee is considered to be exempt.

If your answer is “yes” for question 1 but “no” for question 2, your employee is considered non-exempt.

It’s important to know that this impacts all employers! Often non-profits are excluded from many tax changes, but this one impacts everyone! Nonprofits are NOT excluded from this change.

To give you some background, this change to the overtime rules was first proposed under President Obama, but they were held up in the court system starting in December 2016. The Department of Labor made the final changes on January 1, 2020.

 

We have included the details for these rules here if you want additional information:

  1. The “standard salary level” threshold for white-collar exempt employees will increase from $455 ($23,600 per year) to $684 per week ($35,568 per year). That means starting January 1, employers will need to pay overtime to employees who earn less than $684 per week ($35,568 per year).
  2. Direct work of 2 or more employees – This threshold applies to non-executive, administrative, or professional (EAP) employees (i.e., white collar employees) who earn at least $684 per week and whose primary duties involve performing office or non-manual work and include at least one of the duties of an EAP employee (e.g., directing the work of two or more employees). The duties test did not change from the current rule.

We’re so glad that Chris is always on top of what you need to know about your taxes for your business. If you have any questions about this new overtime rule, or any other tax questions, please contact RBI Services or Community First. We’re here to support you!

Giving Tuesday? Giving Everyday!

On the Tuesday after Thanksgiving, there’s a new annual tradition. Have you heard of it? It’s Giving Tuesday. Around here, our pants are fitting tighter after that big turkey feast the previous week, our thoughts are turning to buying a Christmas tree, and we start thinking about presents for the RBI gift exchange. Giving Tuesday is an international day of giving at the beginning of the holiday season that reminds us, while we’re recovering from the turkey feast and preparing for the holiday hubbub, to remember to give to our community too during this season of generosity.

At RBI, we’re all about Giving Tuesday. And giving Monday, Wednesday, Thursday, Friday, and on the weekend too! Seriously, our driving force, the foundation of our existence as an insurance and accounting company, is so we can serve the underserved nonprofit community with the support they need. Many insurance companies shy away from providing insurance to nonprofits because while they may be high-risk and really need insurance, they don’t have a lot to spend. They’re called nonprofits for a reason!

But we at RBI are really grateful for Giving Tuesday because it serves as a reminder to all of us that we’re part of a larger community. The holiday season is about showing that we care. While we care throughout the year, the cold winter months make it a little harder to get from one place to another, doing the daily things we have to do. The holiday season and Giving Tuesday remind us that it’s not just all about walking around with blinders on as we go through our daily activities. We have this reminder that we can show our community that we care about everyone. Having a great holiday spirit during this sometimes bleak season – looking at all of the bare trees, trudging through snow, dealing with ice – brightens not only our own lives but also the lives of everyone we support.

While we care for many nonprofits, we wanted to check in with Rebecca Blackwell at the Sophie House and find out what Giving Tuesday means to their community. The mission of the Sophie House is to provide encouragement, supportive services, and housing to single women and single women with children that will move them from instability to stability.

When asked about the impact of Giving Tuesday, Rebecca shared, “The Sophie House relies on the generosity of our community to support the single women and mothers in our program. Giving Tuesday is a great way to give back to organizations that make a difference to you. After being able to shop and buy and save lots of money on the things we want to give during the holidays, we then have the opportunity to give back some of the money we saved while shopping, to a cause that makes a difference in the community and to us! Giving Tuesday makes a difference!”

As Board Members for Sophie’s House, we’re so grateful for the impact of Giving Tuesday! We believe in giving through monetary donations, but also through giving our time and energy. So when you’re considering trading in your work pants for stretch pants after Thanksgiving, and making out that long holiday shopping list, consider starting first on Giving Tuesday, November 27th, and make the season bright through a donation to your favorite nonprofit.