Conquering Workflows & Systems For Bookkeepers & Accountants | with Alyssa Lang (Workflow Queen)

Essential Hiring Compliance Questions Answered by HR Expert Matt Tipton

• Season 1 • Episode 70

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Alyssa Lang interviews Matt Tipton, Owner and Founder of WhyHR, an HR firm that focuses on partnering with business owners to assist them in navigating the unknown of having employees. They talk through HR rules and compliance, employees vs contractors, how to decide between hourly or salary roles and so much more.

In this episode you’ll hear:

  • Why HR compliance is important in deciding between an employee and a contractor
  • Where to draw the line with controlling a contractors process and time
  • What and how to pay your employees and contractors and the compliance that comes with it
  • What bookkeepers and accountants should be hiring team members as
  • How to avoid penalties and underpaying team members


About our guest:

Matt Tipton is the owner and founder of WhyHR. It’s at WhyHR that he gets to focus on his passion for partnering with business owners to assist them in navigating the unknown of having employees. That most often includes: compliance training and education, policy creation, and the day to day surprises that employees bring with them.

Additionally, Matt is the creator of the Let’s Talk series that is made to cover the skills gap that we all face in any organization when tasked with leading employees. It’s the Let’s Talk series that has allowed him to be a keynote speaker, regularly covering topics from Difficult Conversations, The Art of Interviewing, Performance vs. Culture, and many others designed to strengthen individuals and organizations of any size. Matt stays active in his community by regularly volunteering with his local Rotary club, OKC Midtown Rotary.

Matt is married to Brook Tipton. Both are proud graduates of the University of Central Oklahoma where he currently serves on the alumni board.

Connect with Matt Tipton:

Check out his website: https://whyhr.guru/
Send him an email: matt@whyhr.guru 
Give him a call: (405) 627 6326

Resources mentioned in this episode:

⚙️ Clockify

Thanks for listening. If this episode inspired you in some way, take a screenshot of you listening on your device and post it to your Instagram stories and tag me, @workflowqueen

For more information about the Conquering Workflows & Systems for Bookkeepers & Accountants Podcast or interest in our programs or mentoring visit our resources below:

Visit our website: workflowqueen.com

Check out our courses: workflowqueen.com/courses

Follow the Blog: workflowqueen.com/blog

Connect on LinkedIn: linkedin.com/in/alyssa-lang-wq

Connect on Instagram: instagram.com/workflowqueen

Connect on Facebook: Facebook.com/workflowqueen


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One of the number one questions that we get inside of my big program, breakthrough is all geared around hiring. And so hiring, I feel like is a very overwhelming thing for most business owners, mostly because when we start our business, We don't think that we're going to hire, we really think this is a side hustle and then it turned into this big business and now we've actually got to start getting other people in. So that way we could take vacations, prepare for long-term leaves or really scale the business. And so I am bringing on one of my all time, favorite HR experts. I've actually worked with him personally, and he is just incredible. He's been a guest expert in my group coaching program, breakthrough. His name is Matt Tipton and he owns YHR. He's incredible today's episode I will say is probably. I can tell you right now going to be the most popular episode I will ever record. And the reason why is, because what he's about to answer for you guys in regards of HR, he's going to talk about compliance. what. You know the difference between the employees versus contractors, why this information is so important, what exempt and non-exempt means, what it means to actually pay people. What are those minimum thresholds? Literally, we dive into so much that I think I ended up having to write out two to three pages of notes just for you guys. And so I really recommend that you listen in, if you need to come back, save this episode, if you really liked it, and you want Matt back on, please reach out and let me know. I really hope that you have a pen and paper because there's a lot of stuff that you're going to want to write down for today's episode. Hey, everyone, and welcome back to yet another episode. I'm so excited because I am going to bring on an amazing guest today. You can't see him cause you can only hear us, but he looks like he's about to go to Hawaii. And I'm like all about this life because you know, as everyone listening here that I love my vacations. So he's making me want to go to somewhere tropical. So thank you for that. But I wanted to give a huge warm welcome to Matt Tipton. So I've actually worked with Matt myself at my, my company as well. Back, oh my gosh, I think it's almost been like two, maybe two and a half years ago. I was introduced to him by Ben Day, which most of you know exactly who Ben Day is. And so he introduced me to Matt and he's just been such an incredible asset, not only for myself when it came to the hiring, but also like the compliance and the things that are kind of scary as a business owner. But also he's been such a great asset for our group coaching program breakthrough. He's come in and supported our students as a guest expert. So without further ado, Matt, cause I can talk all day, every day about your greatness. Please feel free to introduce yourself. Will do. And Alyssa, just thank you so much for having me. I love your energy. I can provide you with the inspiration to go to Hawaii. That's great. I will feed off of your excitement. So yes, as you mentioned, so Matt Tipton I, uh, own and operate. A HR consulting firm based out of Oklahoma city, but we, uh, support all across the country different businesses, small and midsize. And to your point, we specialize in compliance. It's that world of, you don't know what you don't know when it comes to employees and that can be a scary place, I think for a lot of business owners. And it really doesn't matter if. If you've had your business for several years, or you're just getting started you know, things are always changing in that landscape. And so it's our job to stay on top of it and to educate I've been doing HR. So that's, uh, I'm one of those rare breeds. I got my degree in HR. About close to about 20 years ago. And I literally have done it ever since. And, YHR, we're going into our 10th and 11th year, of being a practice. So it's exciting times. Wow. I didn't know it was that long. That's amazing. Yeah. Yeah. Let's see. It's exciting. Yeah. We're, we're definitely blessed and thankful. Absolutely. I can only imagine how much has changed in 10 years. For HR, like every day, I feel like things are always changing. Absolutely. And that continues to be that way. I mean, we're, we're not sure we've seen the department of labor just, you know, it seems like every week they're rolling out, you know, new guidelines or new suggestions and just trying to stay on top of it. Absolutely. And how do you, I'm just really curious just for myself, because I'm like, my process brain is like, man, that must be such a pain because you have to constantly stay up with it. Where do you guys go as like the HR like company, where do you guys go for like your information to be able to then therefore translate it? Yeah. And I mean, absolutely. We're definitely not just, scouring all the different Department of Labor websites across 50 states. so we do have tools very similar to, I'm sure, industry specific, you know, go to type places, but we certainly subscribe to legal software. We subscribe to the Society for HR management. And so every time that there is anything that's even a perspective law change that's going to take place that could impact employers and employees, we're really far out in front, uh, which is nice because we're able to take that information. And I think this is key for especially your listeners. I hope they hear this, that not everything applies to every business. Yep. And so. There is so much inundation that takes place. We're able to at least filter that, you know, look at our client list and say, okay, this is who it applies to. This is who it doesn't. And a lot of times it's still reaching out to all of our client base so that because they're going to hear about it and we don't want them thinking that we forgot about him. It's like, no, you know, you're going to hear about this law change, but it doesn't apply to you. And here's why. Maybe you don't have the right number of employees yet. Or you may not ever. And so you just need to put that on the shelf. You know, that's just, that's just noise. It's going to get in your way of doing business. Whereas others it's like, okay, you know, you're a growing business. You're going to hit that threshold. Let's prepare for it and let you know what that looks like. I like that. I think it's so funny because this morning, not even joking with you. One of our breakthroughs today was talking about is it on us? As bookkeepers and accountants to stay on top of telling our clients about changes with like for their instance was, QuickBooks online. And for me, a lot of people are like, no, it's not on us. It's not on us. Like that's their job to like, look at the emails from, you know, the software. And I kind of went against what everybody was saying, which was just like, But if you've got the update and you find that it might be necessary for some of your clients and it doesn't hurt to just send that update, to just send that, like, Hey, just so there's awareness. Like, for example, the BOI is a really big thing for I don't know if you've done that process with your business. It's like a whole thing, right? You have to register by certain day and then you're fine. Like 500 every day. Like it's crazy. And I might even like be saying it wrong, but so nobody quote me, don't come after me, but what I'm I like that you guys are putting forward the parts where it's like, Hey, we're going to loop everyone in. And if it's going to affect you, we're going to help you. Because I think that that's where in the accounting space, I do like to be that resource for our clients, even though like, yeah, people say it's tedious, but it's like, That's why you need to have a team. So you're not researching it, put it on someone else's plate. It's so true. And, you know, HR, I think can sometimes be a little bit notorious for being a very reactive style for a lot of employers, even, even, even on the corporate HR side, HR can be very reactive. So something happens, an event takes place, an audit takes place, you know, there's some sort of lawsuit that takes place and all of a sudden you are reacting to that situation. And you typically find gaps in your processes as a result. And it's like, okay, we need to fix this. And so, you know, when we started and I, you know, kicked off YHR you're still going to have those reactive moments, but we want to build ourselves and we want to be education first proactive HR so that we're as much out in front as possible and we're educating. You know, I mean, it's, it's not often, but sometimes that we educate our employers and say, Hey, this is, this is a risk and you need to be aware of it. And sometimes as a business owner, they say, you know what, I'm going to take the risk and that's okay. As long as you're informed and you understand, you know, what's good risk and what's bad risk and what that could lead to, what that looks like. Yeah. And we want to be that. Yeah, and you want to be that those people who are like almost the liaison between the information and the jargon because for me, if you put that, sometimes when you, when we have talked and you're like, you say the things that have to be inside the statement, I'm like, I don't even know what you're saying, but I know that you're like, this is really important that you put it in there, but you also say in a way where it's like, this is going to sound like, Crap, but it's not. It's very important that you put this key sentence key. That's right. You know, whatever that is. And you're like, we have got to do it. But here's what I'm trying to tell you in like Alyssa Plain terms, which I've always appreciated because you don't like speak over. And I think a lot of people sometimes forget that you're so well versed in your space that sometimes we forget that we're talking to people who are like, what are you talking about? And that's fair. I mean, I, certainly appreciate that when I'm You know, obviously talk it to whether it's my attorney or my bookkeeper or CPA that they make it in a way that I understand, because that's an area that I don't know. And I need to be informed. Exactly. So I think you segued beautifully without really recognizing into the conversation, I think is the biggest in the space that I see a lot, which is compliance, So one big, I would say probably mistake in our industry. And I'm sure it's not just our industry is that a lot of people just think that they get to define, oh, it's going to be a contractor. Oh, it's just going to be an employee. I get this all the time inside of our breakthrough. Right? So like, that's why we brought you in. Cause I was like, I can't tell you guys what to do because it's based off certain compliance rules, regulations. So I would love for you to kind of blow the minds of people who are wanting to hire to just familiarize them with the importance of this conversation. No, that's spot on. It is, it's extremely important and for a couple of reasons. So, right now, if you were to go out and just do your own search on the, the latest legal update related to the employer landscape. Regardless of what state you're in, whoever is putting on that seminar, if they're speaking to employers, one of the hottest topics that's gonna come up is misclassification. Of employees and independent contractors. It's one thing that for years has been tracked by the IRS. And they have their, their testing. And we'll, I'll talk a little bit about that. But now the Department of Labor has jumped in and created their testing that goes into this. And so what we're talking about for your listeners is that, okay, you know, you're at that point, you need to hire somebody. One of the defaults that we have is that we say, Oh, we'll just make them a contractor. We don't have to worry about taxes. You know, they'll get paid exactly what we agree to and what that rate is going to be. And, you know, wash our hands of it and we're good. And that's just not how it works. There are regulations in place that define what a contractor is and that define what an employee is. And the most simplest way that I can put it in the way that the IRS looks at it as well as the Department of Labor is we call it the behavioral test. And what we're looking for is control, controlling the behavior. I always like to use the example of somebody that mows your lawn. You know, you pay somebody to mow your lawn. Do you provide them with the equipment? Do you tell them what time to show up? And you know, no, you don't. You, you pay a lawn company and they show up and they mow your lawn when they fit it into their schedule and they get it done. And then they send you an invoice. Now, if you own an apartment complex, that was your business and you had a groundskeeper and you kept the tools to take care of the lawn and you know, in your shed that would be an employee because those are your tools and you employ the lawnskeeper. And they come in and they, they take care of the grounds. And so that's what we're talking about. And a lot of times, especially with, we'll bring it back to bookkeeping and as some of your listener base that's a common mistake and that, you know, are you really hiring a contractor that owns their own equipment that really runs their own business? Are they solely working for you? Are they working for other people as well? And if you're someone that's growing a business, you're like, well, I don't want them to work for other people. Okay. Well, you've pretty much summed it up right there that you're hiring an employee and not a contractor, and that comes to licenses, that you subscribe to, that you allow them access to. In other words, they don't carry their own license for whatever you know, tools, software that you're using. These are all things that factor into that control space. And, and you have to weigh both sides because when you look at misclassification and penalties, there's a reason that the conversation never goes away in all these legal seminars. It's because it's one of the largest audits that takes place for employers. it's very easily detected. you decide that you're not, you're going to part ways with one of your contractors. And a lot of times those contractors don't really fully understand what it is. you know, they just know they're getting paid, but all of a sudden they're not getting paid anymore. What do they do? They file unemployment. Well, since you paid them as a contractor, they didn't pay into unemployment. There's nothing there. And so what happens is that kicks over into that Department of Labor space. It says, Hey, what's going on? And it starts opening up that door into your business. Where again, there can be audits and penalties and back pay and taxes and things that catches up to you that you had no idea about. And so it's just, it's real important. You know, this is also a space that the regulations, they don't loosen. They only get more strict. And I think that's important. Yeah. So in other words, every time that we see another rollout, when it comes to independent contractors versus employees, very rarely, if ever we seen something come into play that makes it easier. For somebody to be a contractor versus employee whenever they're working for somebody. Typically it's, it's again, like the Department of Labor was the latest to jump in. It's always been an IRS issue for the most part. They say, you know, we want to play ball too. And so they came out with their regulations and for the most part they're the same. It's all about control and who has it. that's what we have to look at as business owners and make sure that we stay on the right side of that. Yeah, and I, I think that the one part that I can even say for myself, because going through this process of, you know, the first person I ever hired was one of fail, not because of them. It was all because of me because I did not know what I was doing. But the first couple of hires I made were always like, Oh, they're a contractor because I want to pay them a set fee in my mind. It was always like, This weird justification of why I was going to be able to pay them that specific way, AKA meant contractor, AKA meant I don't want to pay into employee taxes because I don't want to have to do that. And then over time, I think it was when I was like starting to rapid hire. That's when I started reaching out to you guys specifically for workflow queen at that time. And I remember just being really overwhelmed. And I think I got on a call with you and Ashley. I know Ashley, she still works with you, right? I love her. She does. Yeah. Love her. Um, so we were, I remember us all on the call and I was like, wait, what? And I can't even decide between salary and hourly. Like once you guys like concluded the information about employ, I'm sorry, employee versus contractor. It was then the question of, And I thought that I got control over that. So I did have a question that I know is going to come up for other people. Where is the drawing line that we're allowed to, in the case of a contractor, drawing line where we say they're in our QBO because we have to add them to it, or we have to add them to our last pass, which is where we store all of our passwords. Where does it become actual control versus like, we're just giving them the access that they need in order to do the necessary job. And the other part of that question is the process, because I'm really process driven. I want someone to follow a process. Where does that line get drawn? Yeah. That's a really tough thing to answer. And obviously go ahead and put this and I'll go ahead and put this disclaimer out there. I'm not an attorney, so I want to make that very clear to your listeners. but this is not out of our realm and territory either. So when we talk about you know, weighing the scales. The scales of, and that, and that's truly part of it, you know, is giving somebody access who, again, they're running their own business, they're doing their own thing, but I want to utilize them for my business, which requires me to give them access, they're using their own tools, they represent themselves, they're just going to be specifically doing these deliverables for me, which requires them entry into. Fill in the blank, you know, your QBO, whatever that may be. and in our world, I look at that and I was like, yeah, that's completely reasonable, right? There's still an independent contractor due to all the other factors outside of this one, you know, point of entry that they need to have access to in order to do what I'm contracting them to do for me. Gotcha. So it's more like what I'm also hearing is talk to an HR professional, but maybe legal. Yeah, I think if, know, keep in mind, we, we have a lot of, employment attorneys that we work with. We have good relationships with, and certainly if there's anything that is on the border, For sure. Let's just not not clean cut. And even then legal is going to tell you, you know, very similarly, you know, some of the same stuff that it's like, okay, this is our best advice from what we've seen, because it's all about past precedent, you know, have we worked with somebody that's done the exact same thing? And how did it work out for them? And and that's very true in as much as it is in the legal space. And I'll let them speak to that. But in the HR space as well. It's like, what have we Actually seen happen to our own clients and past precedent. You know, should there have been, you know, some sort of an audit for, for one of our clients in that exact same scenario. So definitely experience helps for sure. And what we've seen. Yeah. I always recommend like when that conversation comes up, especially because breakthrough, that's where we teach hiring and I have to be very clear, even on our own sales page that we do, we are not HR consultants. We are not here to give you legal advice. We get asked all the time. Do you, you know, give contracts? I'm like, nope, because my lawyer told me not to. Right. I don't want to be, she's like, do not be liable for that. They can go hire someone. So what I've done is connected with you, do what my lawyers brought you both on actually as guest experts so that people knew how to connect with you guys and work with you or get support from you. I pride myself in being that person who's come kind of like the bridge between the gap of like, I may not be able to support y'all on everything, but I can definitely do with someone who can which has been really cool to like experience. But another thing that comes up a lot for this conversation is in our space. Specifically, there's a lot of people who like to pay. their team members in different ways. So obviously there's employee, obviously there's contractors, but one of the big things is I'm just going to pay someone per client that they do a certain percentage, right? So like a percentage of the fee, if the fee is a hundred dollars, they pay them 30 percent of the fee. So, you know, the team members making 30 per client that they finish. A lot of people justify it by, you know, it makes them more efficient because then they could, if they can get their work faster, they can have more capacity for more clients, therefore make more money. Sure. And, I'm wondering if that's, that's, is that, I wouldn't say okay, but is that something that when someone is paying their contractor, they're free to essentially pay them as they please? If it truly is a contractor, and so a 1099 based agreement that is, yes, I mean, you basically are, you know, you're coming to terms on this is how because that goes back to the behavioral test. Part of the behavioral test is the financial test, and the financial test talks about profit and loss, and so as a contractor, I'm responsible for if I make money or I don't make money. So, you know, if it takes, if I agree to a certain fee percentage with you of 30 percent of the fee it's to my incentive, right, to get that done as quickly as possible because that, my own time that I'm spending to do my work. Right. It's going to be worth more if I'm able to do it faster. And so again, I'm in control of the profit and loss of the work that I do. Does that make sense? Yeah. You actually like, just, it kind of clicked in my mind when you explained it in the way that you did, where you said that ultimately it's like they get to control it because if they can control their speed, therefore they're a contractor because they can control that. That's a really interesting perspective. Cause it just seriously, just like clicked. I'm like, how many years has it taken for things to click? Yeah. Here we are. I get it. Absolutely. Yeah. It's too much. So what I'm hearing though on the other end of that is employers, or I'm sorry, employees. So employees in this case, in that scenario may not get that type of opportunity essentially. Yeah. So that's very much so.. I mean, there's definitely some nuances and, you know, we can get creative, but there's something that you can't get creative on is, is mm-Hmm, a couple of things. so we've determined that they're not a contractor and they're going to be an employee. Well, now that you move over to the employee space, we've entered into the realm of Department of Labor. And the Department of Labor, when it comes to employee status, is governed by the Fair Labor Standards Act, so FLSA for your listeners. And underneath that umbrella, they dictate, if somebody is exempt or not exempt. And when we say the word exempt, what we're actually saying is they are exempt from overtime. So, depending on where you work and what state you're in, you have to go by those overtime laws. For our purposes, the majority of the states that are out there. it's based on a seven day cycle in a 40 hour work week, so 40 hours within seven days, whether that's Monday through Sunday or Sunday through Saturday, however you set it up, you have to establish your seven day cycle. And so when we say exempt and non exempt, what we're saying is again, you're exempt from overtime, meaning you can pay them on salary. Okay, and I'll talk a little bit about that in a second. So let's just say they're non exempt. So non exempt meaning that they're paid hourly and they are eligible for overtime. So time and a half for anybody that works over 40 hours in a seven day cycle that you've established as a business. That is the benchmark. So when we talk about percentages, and we talk about how else we can pay them, you still have to be able to show the Department of Labor, should you be audited, that they still made more than minimum wage for the hours that they put in. Okay, so there's still a math equation that exists in there. So it's always, it really just comes down to hours paid for hours worked and you can't pay somebody less than minimum wage. And we know that, you know, their minimum wage is different by state and some states is different by county or city or township or whatever it may be. So you have to be aware of that as well. Now most, I'm sure, of your listeners, I mean, if you're paying fair market wages, you're not going to, you know, come close to that. But, if you have some of those creative ways that you've come up with on how you're going to compensate your employees, if you can't clearly show hours paid for hours worked is always over minimum wage, you need to take a look at your pay structure so that you don't get in trouble. You know, from the Department of Labor on that. Now let's go back to exempt and non exempt. So, I think this is a big topic for especially bookkeeping firms. bookkeepers, unless they're managing other bookkeepers, And when we say managing other people, bookkeepers, I mean, actually having control over their work. So supervising them, you know, doing performance evaluations over them. You have discretion to fire that bookkeeper that works for you. So you have a certain amount of control over the end product, unless you're doing those duties, typically the bookkeeper themselves, that's punching in, punching out, those are non exempt employees and should be paid hourly. Interesting. Okay. And the Department of Labor doesn't care if you overpay somebody, they just care if you underpay somebody. At least pay them X number. Exactly. Gotcha. Exactly. So that's how that works. So we just want to make sure that our bookkeepers that are working for us, that are, they're punching in, they're punching out and we're following any of those, you know, specific state regulations that applies to where we live. and for the most part, again, It's going to be, the 40 hour work week within a seven day cycle. Now for your California listeners out there, overtime's based on the day. So eight hours in an actual working day. and so it does get a, it's a little bit more complicated, but. Yeah, for the most part, that's that's really where everybody is going to fall and you just need to make sure that it's always your responsibility as the employer. The burden of proof is on you, which is why again, you need to have a good time tracking system to make sure that you can accurately show that you did. You know, fairly pay, uh, your employees. I love that. Well, everyone already knows that I'm obsessed with Clockify so y'all already gonna know that I'm gonna talk that Clockify is our go-to. Yeah, and I would say especially, you bookkeeping firms, that have come, through your class that have hit us up. You know, we've seen a lot I think a lot of people wanting to do the right thing. And most people are tracking time anyway, because they're, it's being built maybe back out to a client. So they need to see exactly, you know, how much time they're spending on a particular client that they're working for. But again, You know, we still need to have an accurate record of the totality of the time spent for that employee. Yeah. I love that. I bet you a million dollars. You have a lot of keepers and accountants reaching out mostly because we are the type of industry too that is so about compliance because we're so used to following the rules for our clients that you probably have that uptick of like, I just, Matt, you tell me, what do I need to have in place? What do I need to do? Yeah. Absolutely. Absolutely. Because they're going to listen more, well, other industries might be a little bit more risky sometimes, but I feel like we have a different type of brain. Like, you know what I mean? Where we're like, we don't want them coming knocking on our door, like the IRS. No, and that's very true. That's very true. And I, I, I think, and we appreciate that obviously. So it's nice to have that. And you're right. There are some industries and I'm sure they're clients of some of your clients, that know exactly what that risk is game looks like and where they're more tolerant in certain places than others. Yeah, definitely. I did want to go ahead. I think this is, if this is all right, real quick, I want to talk about exempt. So for those of you out there that are listening a couple of, we talked about how the laws are, there's always something changing. I do want to be very clear. So one of the biggest changes that we've seen in many years, is for exempt employees. So for our purposes, again. By definition, exempt means exempt from overtime. So for most of you out there, when you hear that term, you're thinking, Oh, I pay them on salary. So let's just call it $40,000 a year. So let's say you pay somebody $40,000 a year. Well, most of us are familiar that when we pay somebody hourly, there's a minimum wage. What some of us may not be familiar with is that when you pay somebody on salary and they are exempt, that's key, there's also a minimum wage. And for several years, that minimum wage has been 35, 568 a year. So annualized, that's what that number is. And so again, just like by law, you have to pay somebody at least minimum wage. On hourly, you have to do the same on salary. So that is a big audit point. So for those listeners, if you're paying somebody on salary, and they're working a full time schedule, so 40 hours a week it needs to come out to that number. And if it doesn't, you're below that threshold, then yes, you're, you could be in violation of a wage an hour. Claim to the Department of Labor. Okay. Now what's the big change that I'm talking about is that that minimum threshold, 35, 568 a year is going up July 1st, 2024. So based on whenever you're listening to this July 1st, 2024, that minimum threshold goes up to 43, 888. So if you're our example, if you're paying somebody $40,000, Annualize as an exempt employee, then you're going to have to make a decision. And the decision is you either raise them to that minimum threshold, which is $43,888, or you convert them back to a non exempt employee and pay them that hourly equivalent. To $40,000. And now they're eligible for overtime. But for some of you, they may not work overtime. They may always work, you know, a pretty strict 40 hour schedule. So instead of adding more to your bottom line cost wise from an expense standpoint, it may make more sense to go that direction, but again, you're going to have to track hours. You still have to be able to show that they didn't work 41 hours and you owe them time and a half. So I want to be very clear about that. And then the last point on this, that minimum threshold so that the Department of Labor, when they released their regulations, decided to stair step it. So July 1st, 2024, it goes to $43,888. On January 1st, 2025, this is the big jump. It's going to go up to $58,656. So we'll just round it up and call it $59,000 a year. So if you think about where we're at today. Which is, you know, $35,500 going up to $59,000. There's a lot of businesses that can't. It's big. I think the Department of Labor estimated that 3 million workers and they don't look at it as in 3 million workers are going to get this massive raise. What they're saying is about 3 million workers across the US are no longer going to be exempt. So they'll go, they'll all be not exempt and be now eligible for overtime, which is the whole point of the law. Like, this is this is what they're trying to get to is they're trying to make sure that you know, everybody is keeping up with inflation and that. You know, if they're not making at least this as a minimum on salary then they need to be hourly and they need to be paid time and a half. They look at it as a positive. A lot of times we look at that as a negative, as an employee saying, Oh man, I'm no longer going to be a salary. Now I'm going to be hourly. The government looks at it the opposite way. They're like, no, this is a good thing. You're now going to get paid for time that You know, maybe you didn't get paid for before and you're going to get time and a half, but regardless how we feel about it that's where it's headed. for your listeners, again, just depending on when you are listening to this podcast it's very possible because July 1st is not here as of me talking. Yeah, but it's coming. It's coming soon but there could always be an injunction that gets filed by a judge that, you know, the numbers, you know, could change but as of right now, so we're one month away, we are currently prepping all of our clients and we're doing spreadsheets on, you know, who's currently below the new threshold and we need to make decisions. You know, is this an employee that works 60 hours a week regularly? Are we willing to pay 20 hours of overtime or does it make more sense to give them a raise? And so that's the kind of strategic conversations that we're having with employers. On, you know, which direction do we go? Are we going to keep them exempt or are they going to move to non exempt? And that, just as a question, I know that me and you recently talked because I was hiring my personal assistant and we got on a call about, you know, and then you had warned me about there might be these changes and at that time it was like, we don't know yet type of thing. And now it looks like it's moving a little bit more forward, but you said could still change. So. In this regard, we're talking like, doesn't matter what this person does in your company as like being paid salary, like they could be like the bottom of the totem pole role, you're talking base salaried employee like has to be at least paid full-time, at least 58 as of, you know, January 1st you said of 20, 25 or 59, something like that. Yeah. So the way the exempt, non-exempt process works, so to simplify exactly the question you're asking. The very first question in the list of questions that are part of what makes somebody exempt versus non exempt is the salary. So it starts there. So if you're not willing to pay the minimum, then there's no point in looking at the rest of the test. So there are more questions to the test., there's an executive test. There's an administrative test. There's a, like a computer professional test. There's a creative test. So for those of you that are hiring, you know, maybe like marketing manager, I'll utilize that job title, social media specialists, those types of things, graphic designers. There's an education test. So they're, the specific tests that exist. But question number one is always, do they make this much money? And that, that number right now, as we mentioned, is the 35, 568, that's moving to 43, 888, and then moving to 58, 656. And that is their, I mean, that is the law. I mean, that's, that goes into effect on those dates. So the only thing that would change that. From today is if there's a judge somewhere again, starting against the legal side of it, that files an injunction that maybe says the Department of Labor overstepped. This is too drastic. Employers can't do this. And then they get into a fight. So we'll see if that happens. We can't operate that way. We can only operate with what we're given. And so that's what we have right now. And those are the assessments that we're working through. But I will tell your listeners this regardless of all of that talking about, you know, Hey, this is where the salary threshold is going and getting caught up in that. The thing that I want to stress is look at where you're at today And if you're paying somebody on salary Make sure that you're within the exempt non exempt thresholds Okay, and that you're not misclassifying them in that category Because just like when we talked about independent contractor versus employee when we talk about employees, you know, don't get caught in the same type of wage an hour You Audit through the department of labor because you denied somebody overtime that was otherwise owed overtime. Cause that's really what we're talking about when we say exempt versus not exempt. Gotcha. Yeah. It's, this is why people, I do not deal with this myself. This is why, like, cause there's, there's so much information, but I think I really wish that this industry had more. Expertise around this arena because I feel like we feel very like almost what do we do? We want to get a bookkeeper, but I just want to like control them because I see people all the time This is a question. I wrote down and I know that some of these things like you said are based off scenarios and things So, you know, just let me know so that way like our listeners know that yeah The one question I wrote down which I get this a lot and things are just kind of racking up as I remember When you are, you know, whether it's hourly or sourly sourly, did I say that right? Yes, I did. I was like, it sounded really weird when I said it. Yeah. Um, sour, sour, versus Aller hourly, when you are putting together the job posting and someone is an employee, you're required, are you required to always list an amount, even if it's their range of pay? you're not required to. Oh, you're not. Okay. Okay. No, you're not, not on a, on a job. There are certain job sites out there that do that may require that. But that's more about that job site than it is what you, you know, can and can't do as an employer. So yeah, if you want to know. Yeah. Yeah. Yeah. I mean, there's a lot of employers that try to, you know, post in places where they don't post salary. they just want to have more control over that conversation when they're talking to you. It's all comes down to recruiting strategy. I'm a pretty transparent person, so I'm always like, Hey, tell people what you're paying. That way people can self select out, you know, why do I want to spend time looking at a bunch of resumes that, you know, that I, for people that maybe I can't afford. Yeah, I mean, that's so that that's kind of where I that's my two cents, but yeah, teach their own on their recruiting strategy for that. And I like how you said that it's really it's based off. It's not like a require because I've definitely seen and this is where misinformation, which I'm sure you see it all the time misinformation in the accounting space where people will be like, You're required to put it like it's by law. And so I'm going to be like, no, you're not. I'm just kidding. I probably won't. Yeah. I mean, don't get me wrong, depending on, you know, maybe it's a government type contract or maybe, you know, you're talking about prevailing wages for certain type of, you know, contracts that are out there that you are, yeah, you are required to post that kind of stuff. But if we're just talking about your average job posting, Yeah, I mean, you do you, as far as that goes. It's so funny because when you say your decision to be transparent, it's really funny because I actually had a story where I think my, it was my second employee here at Workflow Queen. When I hired her, I was like, you know what, we're actually just going to not, because I think I read somewhere in some book about like, you know, sometimes you want to see what they're going to do. Place themselves at right. And so I put it on the job description. I was like, you tell me what you want to pay based off this job and roll regretted it. I will never do it ever again. And then just because I had a scenario come up, right. So I got on these interviews and some people were like super low. And then we'd had people who were like, it was an assistant job. Um, Some people were saying like$80,000 and some people were saying like, you know, really like some people were saying 30 and like all these different ranges from everywhere. And you could tell the people were super confident versus the people who were like, I feel really bad asking, like, but it's going to miss them out. And I remember this has actually happened because we ended up hiring one of the girls that said this really large salary. I think it was like almost $80,000. It was really large for like an assistant. And so I remember getting on the call with her and being like, we want to select you. But my biggest concern is this conversation, which is around the salary and to get someone who has the idea that they want to be paid X 30 grand less than that is a pretty hard conversation. So gratefully, she moved forward and she ended up, she said, no, yeah, I just, I honestly didn't even know what to ask for. So I just kind of threw it out there. And she was very honest about like, I didn't even know, I was overwhelmed because I don't even know what the range is or what is, you know, whatever. I just did some random Google search. And the reason I regretted it is because like it became a problem later. So that conversation came. And saying like, okay, I want my 30 extra thousand. And it's like, I can't just go. That's why when you were talking about, which is good to hear that the end result about the non exempt versus exempt, that if this change goes into effect, that it's scary to hear that it can go almost a 59 because some people who aren't yet paying their team members that, but at the same time, it sounds like there's. I don't want to say the out because that's not really the right word, but like there is another option, but like you said, you have to do the assessment to determine you have to follow certain rules to do the hourly and then you have to pay overtime, which I like there is like that fear because I think a lot of people in this space are so scared to hire. Sure. Because the pay, the salaries, the things. So all in all to just bring together for anybody who's listening. Like, I think that over time I have learned from my own mistakes that I really wish I would have just put the salary and now it's a range or it just says it. So like, when I talk to you about my personal assistant, I told you exactly like, well, we had a conversation, you told me my threshold and I was like, well, this is what I want to pay them. And you're like, perfect. You're good. You're like, you're in the, you're in set and she's going to be doing this with you. And it was just very insightful. So for anyone listening, you're going to mess up, but like, this is why conversations with someone like Matt or someone like an employment attorney is so important because your business gets to a point where it's like, it's no longer a side hustle. This is a real legit big girl job dot job, like career thing that you put, put together this business. Last thing you want is someone coming after you a year or two later. Now I'll piss you did something wrong in the business one time and now they're going to come after you. That's it. That's it. It's so much. So I did want to ask one more question and then I'll kind of like lead us off because this is so much information. I'm sure everybody's going to be so excited about bringing you on. I already knew it was going to be great because. It's just you and you're always so awesome with information. So what if someone is hiring when you were talking about, there's a minimum threshold, right? When someone's hiring in these different states, because there's different requirements per state as well. Do you recommend like the range or like, because a lot of our people hire remote all over the U. S. So like, what would you give as recommendation for that after they've determined whether non exempt or exempt? Like, let's just say it's an employee, like what would you suggest to them? That's right. And help me understand that question again. So like range of, Oh, because I think higher or not higher. No. So you were talking, no, it's totally fine. So what you were talking about was in this, there are certain states that have certain minimum wage requirements, correct? Oh yeah, yeah, yeah, absolutely. Absolutely. And that's mainly for hourly employees. The most part. So you're talking about, yeah, minimum wage limits. Yeah within those within those but I I think this is a good topic So I may kind of change it up on you a little bit here, but I think this is real important for those because you you nailed it. The more and more that we've been working especially with some bookkeeping firms Is that you do hire it's exciting right to be able to say? Oh, you know somebody can work from their home. Therefore I can hire anywhere, you know in the u. s to to get somebody on boarded and I just you know, here's always my cautionary tale You With that is that there are a lot of state specific laws. So even aside from minimum wage laws, it's important to know that states have their own laws when it comes to work comp. And we have these conversations a lot. So, you know, if you hire an employee in Oklahoma, you have to carry a workers comp policy. If you hire an employee in Texas, Texas, you get the option. you know, if you hire in Tennessee, I think you have to have at least five employees before you carry a work comp policy. it's across the board. And I think that that's important that, you talk to somebody that's going to give you good advice in those areas and understands those laws. And then the other. thing that's also important is that outside of just the millions of different state specific laws that exist out there that, you know, we could take a 10 person, bookkeeping firm and your employee handbook's going to be 150 pages if they're all in different states. Which is, sounds insane, but that's, that's what happens. And so, you know, it's always my advice to Keep it to a limited as much as possible, but if you want to open up that door, that's fine. Just know what you're signing up for and that you're carrying the right insurances in each of those states for those employees. And then lastly, because this comes up quite a bit, so just a little tag here, because I know we're running out of time, but pay time off. That's a big topic of conversation, and it's important for your listeners to know that different states treat paid time off differently. In Oklahoma, since I'm from here, I'll keep bringing that up, PTO is not considered earned income. So, you know, I, as long as I have a policy around it, and if that employee leaves, and the policy says that they don't get paid PTO upon their departure from my company, then I don't have to pay them that, even though that maybe they've racked up, 80 hours or 120 hours of that that they haven't used, but you are in Colorado or Louisiana or maybe California. These states, as well as many, many others treat it as earned income. And so if you have employees in those states and you have a very robust, because you're a very generous business owner and you think it's, you know, you want people to take a vacation. And so you're just, you Like come work for me, I'm going to give you all this time, you're giving them cash and you need to understand that as a business owner that that's their money if they work in those particular states, regardless of what kind of policy you want to have based around the state that you live in. And so those employment laws are based around where the employee resides, not where your business exists. And so that's kind of my two cents on that. That's a lot to unpack. That's a whole other podcast. I'm sure. But I think it's worth saying, you know, if you made it this far and you've heard all these different things for those of you that are out there, you know, hiring across state lines, just be aware of those, insurances and different state laws. Yeah. That's really good. That's really good advice. I mean, I'm in California, which is, as we know, sometimes the worst state for all the things. So we've got like the AB. Yeah. 54 55, whatever the hell that's called. And that's like telling us if someone's in the same line of, you know, does the same role as like the business thing, we have to do employees, like I don't have a choice, I have to hire employees for bookkeepers and it's very, very, very frustrating because like, sometimes I just, they really do fit in the line of a contractor, but then I'm like, I don't have a choice, they pack a punch out there. There's no question. Yeah. But it's also beautiful things out here in California. You get this, you get the weather, but then you get this fair, fair. Yeah. to kind of end us off here. Well, one before I asked my final question, I want to know how can people get ahold of you? How can they get into your world? I want to know. connect with you, see what types of SERPs or offers you guys have to support them. you can always reach out to me direct and you can also go through our website. So just for those listeners that are out there, our website is whyhr. guru. That's G U R U. So that is an actual extension. For those that aren't aware, so our company name is Y H R yhr. guru and then my email address is matt, very simply put m a t t at w h y h r. guru. Feel free to hit me up. I love having these conversations. So even if you're not looking to, you know, hire us as far as services go, but you just need to need to talk it out and kind of see where you're at. And maybe we can help point you in the right direction. We're happy to do that. So it's all about education you know, I'm a business owner as well. And I think that that plays a little bit into my passion for also just want to make sure you're set up to succeed. That's, that's all we're trying to do here. Yeah, I love that. I mean, you share the same value because that's how I met my firm. Like, I'm like, just get on a call because I'd rather guide you in the right place rather than just be like, bye, bye, bye. Because like, really it's value. They're like, wow, you know what the hell you're talking about? Let's start working with you. Sure. No, absolutely. So my last question I wanted to lead off was first to ask you about how to connect with you. Cause my other question is, it sounds like some of these. pockets of information kind of might need different experts. And I know for us, we have to tell our clients like CPAs do this versus bookkeepers do this and financial advisors do this. So I'm assuming also in your realm, there's also like, what type of advice would you give to someone looking to make sure that they are holistically supported when it comes to the hiring process? I know that I can just shamelessly plug myself. If you want to learn how to like do the process of hiring, that's me. Yeah. Yeah. But I will teach you all the things like to actually do hire him on board all the things. But when we're talking about the other experts, it sounds like you guys, the HR experts, but you also kind of plugged in the employment. Lawyers, when would they need to step in? there are certain documents that you need to make sure you are covered for the state that your employees are in when it comes to especially like severance agreements or let's say non solicitation. non disclosure agreements. we've worked with attorneys to create those. So we pretty much, you know, our clients are pretty well taken care of in those areas you know, based on where they're at. But obviously if we're in new territory, then we're gonna, we're gonna scrub that the right way through the right attorney. But anytime you're talking about, you know, non competes, which are essentially going away but there are still some provisions in there by state and by industry. But I think that's very important for bookkeeping firms, because obviously you're giving people access to your client base, and so you want to make sure that a minimum you have a strong non solicitation agreement in place. And we do recommend that you do work with an attorney. I mean, I worked with one to put mine in place for my employees as a consulting business. And that, you know, hey, if you want to go out and start your own HR firm, that's great, but you're not going to be able to solicit, you know, my employees that are going to stay here and work with me or my client base either. And so, you know, there are ways to protect yourself and those are things that you should be looking into, As a firm for sure. I love that. Yeah. I think there's just a lot of confusion of like, where do I go? Who do I talk to? Every time I'm like, why HR? They're like, is that what the why? Or is that like a why? And I'm like, it's like a, why would you do that to yourself and not call it? Why would you do that? Yeah, exactly. And I can't stress this enough. You know, when it comes to attorneys, be sure you're talking to an employment law attorney. That's very important that, you know, you don't, don't call the attorney that you utilize, you know, for your family. Yeah. Your divorce, your family will, you know, that kind of stuff. I mean, there's, everybody has their specialty that's out there. that's just very important. We do run into that quite a bit. Somebody will say, Oh no, I've got somebody who handles that. It's like, well, that's not. Really what they do. that's, that is important. Yeah, I like that you said that. Yeah, I have two different types of lawyers. They both do two different things. Right. You know, so for me, I definitely have learned that over time that like, don't the generics, like it's just like the way that we niche down in our industry. It's like, you don't want people to be working with you if you don't serve restaurants. Like, I wouldn't touch it. Uh, so, Anyways, Matt, this is so great. I never take two pages of notes to make sure I get it to my people. I actually took two pages of notes, which is great because I have so much to tell them. And I'm so excited to just shout this out to the world. And I appreciate you so much for this because one, I always learn something from you in the process and It's been like years of working with you and I still learn every single time we talk. And I just can't thank you enough. I mean, you've always been a great supporter, but also really great to work with. And you're doing amazing work. Everybody that, you know, has come our direction that's maybe, you know, come through your class. I mean, they just can't say enough of the influence that you've had. So thank you for keeping us in mind as we always want to keep you in mind as well. So it's been great. Well, thank you. That was so nice. Well, thank you Matt for being here today. I appreciate you and everybody just go in and get in Matt's world and get immersed in all things. You might have to, yeah, right. I might, you might have to relisten to this unfortunately, cause there's a lot of info, but great info. Come back to it, save it, like do all the things that you need to do with all the social things. But thank you once again, Matt, for being here today. Thanks for having me. Take care.