January 1 Paycheck Transparency Implementation

January 1 Paycheck Transparency Implementation

Male Hand Filling out Cheque on the TableAlthough the Fair Pay and Safe Workplaces (FPSW) final rule was barred for implementation by a federal district court judge in Texas, the paycheck transparency requirements of FPSW are still scheduled to become effective January 1, 2017. For federal contractors with new contracts of more than $500,000 issued after January 1, 2017, they will need to insert the paycheck transparency requirements in all subcontracts, except for those involving commercial off-the-shelf products.

What contractors and subcontractors should know

Contractors and subcontractors are required to maintain wage records under the Fair Labor Standards Act (FLSA), the Davis-Bacon Act (DBA), or the Service Contract Act (SCA). Covered contractors, and all covered subcontracts, must provide pay-related information to all workers subject to the requirements regardless if they are classified as employees or independent contractors.

Covered employees are required to be provided the following information:
1. Wage statements that include hours worked and pay (which contractors and subcontractors are also required to provide a statement that lists the following:);

  • The total number of hours worked in the pay period;
  • The number of overtime hours worked in the pay period;
  • The rate of pay (such as hourly or per day);
  • Gross pay; and
  • An itemized listing of any additions to or deductions from gross pay
    • Reportable additions: bonuses, awards, and shift differentials
    • Reportable deductions: withholding for taxes and voluntary deductions by the

2. Notice of exemption from the FLSA’s overtime requirements; and

  • Contractor or subcontractor must either keep record of hours worked or notify
    employee that it considers them exempt

    • Notice to exempt employees can be an offer letter, employment contract, job
      description, or wage statement, and it needs to be provided only once either
      before they perform work or in the first wage statement

3. Notice to workers who will be considered independent contractors.

  • Notice must be provided in writing before workers begin work on each covered
    contract and must be provided separately from any independent contractor

All three notices must be provided in English and in the language in which “significant portion(s) of the workforce is fluent.” Contractors will need to determine what a “significant portion” is as the Department of Labor (DOL) did not specify a specific amount. The notices can be provided electronically as well.

Contractors and subcontractors that currently comply with the wage statement requirements and that will be deemed to have fulfilled the paycheck transparency requirements are Alaska, California, Connecticut, the District of Columbia, Hawaii, New York, and Oregon.

Source: HR Hero | Paycheck transparency: Are you ready for January 1 implementation?

For more information contact info@apbenefitadvisors.com. The information contained in this post, and any attachments, is not intended and should not be misconstrued as legal advice. You should contact your employment, benefits or ERISA attorney for legal direction.