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DOL's Revised, Final Rule on Overtime Doubles Minimum Salary Level Starting December 1, 2016

Posted By Daniel Schenck, Clark Hill PLC, Wednesday, May 18, 2016

It Still Hurts - DOL's Revised, Final Rule on Overtime Doubles Minimum Salary Level Starting December 1, 2016

By: Paul A. Wilhelm

 

On May 18, 2016, the Department of Labor ("DOL") issued its long-awaited Final Rule for overtime exemptions, focusing on the "white collar" exemptions (executive, administrative, professional and certain computer employees). The Final Rule comes after the DOL processed 270,000 public comments on its proposed rule about which we wrote you, from late last summer. The Final Rule will take effect December 1, 2016 and will:

  1. Raise the minimum annual salary level required for "white collar" exemptions to $47,476 ($913 per week), up from the current $23,660 ($455 per week) - an increase of just over 100%. (Recall, the salary level test does not apply to doctors, lawyers, or teachers, and certain computer employees can be exempt if paid at least $27.63 per hour and meet applicable duties tests.) This final level is down slightly from the $50,440 annual figure proposed last June.
  2. For the first time, allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level (i.e., up to $91/week or $4,732 total annually), provided these payments are made on a quarterly or more frequent basis. The remaining 90% of the required, new salary level is $822/week, or $42,744 annually, totaling $47,476.
  3. Raise the minimum salary for those covered under the "highly compensated employee" exemption, from $100,000 in total compensation annually, to $134,004 - an increase of 34%. This final level is higher than the proposed rule, which had called for a new level of only $122,148 - an increase of 22%.
  4. Impose an escalator provision into the FLSA, automatically "updating" the above salary levels every three years, beginning on January 1, 2020, by tying the levels ad infinitum to certain economic measures. The proposed rule had called for annual "updates."
  5. Impose no changes to the duties tests. The DOL had sought comments on possible changes to the standard duties tests for these exemptions, but decided not to make any such changes.

Misclassification of salaried-exempt employees is among the fastest-growing civil actions in both federal and state courts. With the Final Rule, the incentive for employees (and/or the DOL) to claim misclassification has increased. We advise clients to begin assessing whether they wish to pay the higher salaries and/or take other measures. We also advise them to review the duties of their employees that are or may be classified as salaried-exempt to ensure they meet the various duties tests for the white collar exemptions.

 

Look for an announcement regarding the launch of Clark Hill's FLSA Compliance Toolkit through HR Advantage coming soon. If you have additional questions, contact Paul A. Wilhelm at (313) 309-4269 | pwilhelm@clarkhill.com, or another member of Clark Hill's Labor and Employment Practice Group.

Tags:  finance  legal  salary  small business 

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How To Save $100,000

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Wednesday, April 6, 2016

 

HOW TO SAVE $100,000

 

The American Institute of Certified Public Accountants publication Journal of Accountancy published today (April 6, 2015) contained an article on fraud.  As I read the article, as titled below, it occurred to me the article could have been titled “How to Save $100,000”. For example, specific operating ratios, employee guidelines, and company policy tailored to the unique characteristics of your company will deter fraud.

 

 

Antifraud controls cut significantly into losses

 

The presence of antifraud controls such as management reviews and telephone hotlines can greatly reduce the damage done by fraud schemes, and the use of such controls is slowly on the rise. Those are two of the trends identified in the 2016 Report to the Nations on Occupational Fraud and Abuse, released Wednesday by the Association of Certified Fraud Examiners.

 

The biennial report, based on thousands of fraud cases reported by fraud examiners worldwide, provides a detailed look of fraud, its perpetration, detection, and how battled and prevented in various industries and regions. Fraud takes a significant toll on organizations. The fraud examiners who participated in the survey estimated that the typical organization loses 5% of revenues to fraud in a given year. The fraud losses

in the study totaled more than $6.3 billion, an average loss of $2.7 million per case. The 23.3% of cases with losses of $1 million or more boosted that average significantly. The median loss was $150,000. Asset misappropriation (83%) caused the smallest median loss at $125,000. In contrast, financial statement fraud (10%) caused the biggest median loss at $975,000.

 

HOW TO SAVE $100,000

 

Antifraud controls limit damage. Organizations that implement antifraud controls inflict much smaller losses. Organizations that engage in proactive data monitoring and analysis, lose $92,000. Whereas organizations without that control lose double or $200,000. Organizations with fewer than 100 employees were the most likely to suffer from fraud in the study, representing about 30% of the cases reported.

 

FRAUD CONTROLS TO ADOPT

 

The study found proactive data monitoring, management reviews, and hotlines reduce loss by 50%. Fraud training for employees, anti-fraud policies, and codes of conduct in an employee manual are also deterrents to company fraud. We recommend a professional external overview of an organizations fraud control.

 

Tags:  fraud  management  small business 

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"Field Guide" to Financing Your Small Business

Posted By Joel Gottesman, Liquid Capital Of Arizona, Thursday, September 10, 2015
Finance

About the Author.  Joel Gottesman, is the owner and President of Liquid Capital of Arizona, specializing in alternative finance, including ABL, factoring, export, inventory and PO finance.  Joel has also been a successful attorney, banker and small business owner. 

 

Introduction.  Field guides help people learn about and identify different varieties of plant and animal wildlife.  This financial field guide can help you sort through the many financing alternatives available for small business.     

Available Financing Options.  The main financing tools in alphabetical order are: 

Asset Based Lending (ABL).  A line of credit from a bank or finance company in the form of a revolving line of credit tied to the amount of eligible assets, including accounts receivable, inventory and equipment.  The typical size of an ABL line is from $1 million to over $10 million.  ABL loans are generally for well-established businesses that do not qualify for a traditional or SBA bank loan.  Generally, the cost of an ABL line is higher than the cost of a bank loan, but less than Factoring.           


Bank Loans – SBA and Traditional

Banks provide a variety of loan options to small business.  Often the loans are made under the government guaranty programs of the U.S. Small Business Administration (SBA).  The SBA has a number of programs for financing real estate and equipment purchases as well as general working capital needs.   The loans are secured by the assets of the business or the assets financed by the loan.  The maximum amount for SBA loans is $5.5 million.  The SBA Express Loan Program offers loans on a streamlined basis for up to $350,000.   If a business can meet the underwriting standards, an SBA guaranteed loan is usually the most cost effective solution.

Cash Advances.

Cash advance loans are based on borrowing against future revenues based on the sales history of the business.  This is a fast-evolving financing tool for small business.  The typical loan advance is unsecured and ranges from $25,000 to $1 million.  The advance is usually repaid in daily withdrawals from your business bank account over a six to twelve month period.  Because the loan is unsecured, it is usually at the upper end of the cost structure for business finance. 

Community Non-Profit Lenders.  Non-profit community lenders offer loan programs for small business and start-ups.  Community lenders can provide loans ranging from $1,000 to $1 million on favorable terms and take into account community development efforts.

 

Equipment Finance 

Equipment leases and loans can be used to finance needed equipment.  The size ranges from $5,000 to over $5 million.  If a company has spent cash in the past to acquire equipment, it may be possible to “unlock” the cash by financing the owned equipment.    The cost varies with the credit of the business.  

Equity & Arizona Crowdfunding Law

Historically, equity investment for small business comes from the owner, family and friends, private “angel investors” and venture capital firms.  The latest development in Arizona is the new crowdfunding law that became effective on July 3, 2015.  The Arizona law is the first in the nation to “go operational” using a crowdfunding approach popularized by such firms as Kickstarter (non-equity raises).   Under the Arizona law, a company can raise up to $2.5 million if it has audited financial statements, or up to $1 million dollars if it does not.  Equity may be sold only to Arizona residents.  For investors who are “accredited” (meet certain minimum financial tests), there is no cap on the investment amount.  For investors who do not meet these tests, there is a cap on the investment of $10,000 per company.   The new law provides a streamlined process, but there are requirements of the Arizona Corporation Commission that must be followed.  

There are also new developments on the federal level.  On June 19, 2015, the SEC implemented Regulation A+, which permits well-established businesses to raise increased amounts of equity under streamlined disclosure rules.    

Equity investment is usually the most costly form of financing and you have a “partner” in the business until the equity is bought back or the business is sold.

Export Finance

Export sales can be a great channel to grow your business.  The key to export finance for small business is finding a lender that will fund sales to foreign customers. There are a number of alternatives, including bank loans, ABL loans or Factoring.  There are government guarantee programs offered through the SBA and the U.S. Export Import Bank (as of this writing the charter of the ExIm Bank has lapsed and may not be renewed by Congress).

Factoring

Factoring is the cash sale of your accounts receivable at a discount so you do not have to wait for your customers to pay before you can redeploy the cash.  A factoring line can range from $25,000 to over $10 million.  Finance companies usually make their credit decision based on your customer’s credit rather than your credit.  Factoring can help an early stage company as long as there are sales being generated.  Only receivables from businesses or government qualify; sales to consumers do not.   The cost of Factoring is higher than a bank loan or an ABL loan, but can put into place quickly.

Inventory Finance

nventory finance can cover the cost of inventory in the form of raw materials, parts or finished goods.  This type of financing is usually only available to well-established businesses.  It is similar to PO Finance, but does not require that the product be pre-sold.   The financing can be in the range of $25,000 to over $500,000 or more.   The cost is similar to Factoring and PO Finance.

Purchase Order Finance (PO).  A specialized form of financing the cost of producing a product that is pre-sold to credit-worthy customers. PO Finance is used to pay for goods manufactured by a third-party and assures the manufacturer of payment once the product is made.  PO Finance can be useful to smaller companies that obtain a large volume of purchase orders.  The typical size of a PO Finance transaction can range from $50,000 to over $10 million.

Business Community Resources

There are many resources available in the business community to help small business owners and entrepreneurs.  A good starting point for more information is the In Business Magazine 2014/2015 Lending Guide.  The Lending Guide lists a number of Arizona lenders, lending resources and community organizations providing counseling and mentoring.  See the Guide at

http://issuu.com/mediapublishersgroup/docs/inbusiness_1014_lending_guide?e=1180713/9536086

Another excellent resource is the Arizona Small Business Association (ASBA) which also offers an effective mentoring program.  A listing of ASBA resources can also be found online at:

 http://www.asba.com/?business_resources

Wishing you much success in your business!

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Tags:  Access to Capital  entre  finance  financing  small biz  small business 

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Good Time for Entrepreneurs in Search for Capital

Posted By Gabriel Salcido, Arizona Small Business Association, Thursday, July 23, 2015
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7(a) Lending Opens Opportunities for America’s Small Businesses

Posted By Rhette Baughman, Arizona Small Business Association, Thursday, November 6, 2014

SBA Hits Another Lending Record in FY 2014

7(a) Lending Opens Opportunities for America’s Small Businesses

 

WASHINGTON – The U.S. Small Business Administration 7(a) Loan Program reached another lending record in FY 2014, announced today by SBA Administrator Maria Contreras-Sweet. By the end of the fiscal year (Sept. 30), SBA had approved 52,044 7(a) loans for $19.19 billion, an increase of 12 percent in number loans and 7.4 percent in dollar amount over fiscal year 2013.

 

The 7(a) program is designed to provide small businesses with the most comprehensive type of financial assistance to cover the vast majority of business expenses, such as short and long-term working capital, exports, and refinancing existing debt under certain conditions.

 

"As our economy continues to grow and recover, small businesses are the essential fuel to that continued growth,” said Contreras-Sweet. "Thanks to the hard work and outreach by our lending partners, SBA staff, and our resource partners, as well as the small business owners themselves, we have been able to put more capital into the hands of our nation’s entrepreneurs. We know that America’s small businesses pack the biggest punch, creating two out of every three net new private sector jobs in the U.S. These small businesses are the cornerstone of our communities, so their success and expansion is vital to the nation’s economic growth.”

 

SBA had been authorized $17.5 billion in the FY 2014 lending program.  It became clear that lending would exceed that amount; therefore the agency secured an increase for the 7(a) program in the Continuing Resolution that was approved in mid-September.

 

Other SBA loans that did well in fiscal 2014 were those $150,000 and under. Spurred by the fee relief implemented at the beginning of the fiscal year (fees were set to zero), these loans saw an increase of 23 percent in number of loans (30,675) and 29 percent in approved dollars ($1.86 billion) over fiscal year 2013 (24,923 and $1.44 billion respectively).

 

Fee relief was also instrumental in helping veteran small business owners through the Veteran Advantage initiative (zero fees on loans $150,000 to $350,000 to veterans.) Fee relief for veterans began January 1, 2014, and by the end of the fiscal year amounted to $610,000. Fee relief for both loans $150,000 and under, and for Veterans Advantage, was extended through fiscal year 2015.

 Small businesses reflect the dynamic demographics of the United States. In FY 2014, the number of SBA loans to African Americans grew by roughly 36 percent over the previous year. For Hispanics and women, there was an increase of 14 percent for each group.

 

In our efforts to reach out and help small businesses across the nation, lenders play an important role as partners, as it is through them that SBA financial assistance is channeled and managed. In FY 2014, SBA added 308 new lenders that, collectively, made 684 loans for nearly $317 million.

 

As exports continue to play a pivotal role in strengthening the nation’s economy, SBA loans to exporters grew by 3.7 percent in number of loans and 12 percent in dollar amount over last year.

 

One of the ways in which SBA helps small businesses is through providing essential bid and performance bonds to small contractors, which allows these small businesses to be more competitive when bidding on contracts, be they with the government or the private sector. In fiscal year 2014, SBA Office of Surety Bond Program saw an increase of four percent in total contract value, from $6.168 billion in FY 2013 to $6.413 billion in FY 2014. Total bond contract amount also grew from $1.262 billion in FY 2013 to $1.358 in FY 2014, an increase of eight percent.

 

For more information about the SBA’s Loan Programs and other financial assistance as well as services, please visit http://go.usa.gov/GQh3.

 


Release Date: November 6, 2014
Release Number: 14 - 66

Contact:  
Miguel Ayala (202) 205-6420
Internet Address: www.sba.gov/news
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Tags:  financing  funding  lending  loans  sba  small business 

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