hr update & overtime regulation - glga€¦ · 5/8/2015 · an endorsement by the hr...

HR Update & Overtime Regulation

August 5, 2015Webinar

© Printing Industries of America | www.printing.org 2

Agenda HR Update

Supreme Court Update Health Care Law Update NLRB Update HR Trends Survey from the Printing Industry HR State Law Update

DOL’s Overtime Exempt Proposal Background Salary Limits (Concerns and Questions) Salary Data for the Printing Industry Employer Costs Duties Tests Dilemma 541.203 “CSR” Opportunity State Law Interaction Commenting on the Regulation, Ideas/Suggestions What Should PIA Members Do?


Continuing HR Certification Institute Credit Information

This program has been approved for 1.0 hours of General recertification credit hours through the HR Certification Institute. Use of the seal is not an endorsement by the HR Certification Institute of the quality of the program. It means that this program has met the HR Certification Institute's criteria to be approved for recertification credit.

Program ID: (provided at the end of the webinar)Title: Title: 8-5-2015 HR Update & Overtime Reg Webinar

Presenter: Jim KygerPIA Human Relations Department


Health Care Supreme Court Subsidies Case▶ June 25, King v. Burwell

▶ Court concluded statutory language in the Affordable Care Act (ACA) authorizing tax credits for consumers on “an Exchange established by the State” allows the federal government to provide tax credits to consumers on both state and federal exchanges.

▶ Could have affected Employer Mandate/fines in states where Feds ran the state Exchange because employer fines are based on if an employee receives federal subsidy and employer does not offer qualified/affordable coverage

▶ Unlikely other cases that could affect employer mandate will reach Supreme Court again


(Super Secret) Trade Bill Had Health Care Surprise▶ Remember the Pacific Rim Trade Bill (Trade Preferences Extension Act)?▶ Affordable Care Act amendments included the following:

▶ The general penalty for failure or incorrect information to file a required information return with the IRS (which is subject to reduction, waiver or increase for various reasons) will increase from $100 per return to $250 per return. Applies to W-2 & 1099s. Misspellings and wrong SSNs.

▶ The cap on the total amount of penalties for such failures during a calendar year will increase from $1,500,000 to $3,000,000.

▶ If a failure relates to both an information return (e.g., a Form 1095-C required to be filed with the IRS) and a payee statement (e.g., that same Form 1095-B required to be furnished to the individual), these penalties are doubled.

▶ If a failure is caused by intentional disregard, the new $250 penalty noted above is doubled to $500 for each failure, and no cap applies to limit the amount of penalties that can be applied with respect to that calendar year.

▶ Work on 1095-C forms now (IRS does not intend to fine for good-faith effort)▶ For vendors and 1099s, use IRS TIN Matching service


Penalty Description Current Penalty Revised Penalty

Failure to file an information return or provide a payee statement

$100 for each return with respect to which a failure occurs


Annual penalty limit for non‐willful failures $1,500,000 $3,000,000

Lower limit for entities with gross receipts not exceeding $5M $500,000 $1,000,000

Failures corrected within 30 days of required filing date $30 $50

Annual penalty limit when corrected within 30 days $250,000 $500,000

Lower limit for entities with gross receipts not exceeding $5M when

corrected within 30 days $75,000 $175,000 Failures corrected by August 1 $60 $100

Annual penalty limit when corrected by August 1 $500,000 $1,500,000

Lower limit for entities with gross receipts not exceeding $5M when

corrected by August 1 $200,000 $500,000

Failure to file an information return or provide a payee statement due to

intentional disregard$250 for each return with respect to

which a failure occurs (no cap)


(no cap)


Supreme Court Gay Marriage Case▶ In late June, the U.S. Supreme Court ruled that same-sex marriages must be

permitted by states and recognized where such marriages legally occurred elsewhere.

▶ Some benefits/tax clarity for employers: i.e., everywhere in the country, an employee’s legal marriage to a same-sex spouse will be recognized. With respect to tax-qualified retirement plans and other tax-favored employee benefits, federal law already provides that a same-sex spouse is treated the same as any other spouse regardless of the state in which the couple resides.

▶ State tax treatment will have to be applied uniformly for all employer-provided spousal benefits.

▶ Benefit and Title VII Issues RemainMarriage and sexual preference are not covered under Title VII. However, the EEOC takes the position that lesbian, gay, bisexual, and transgender (LGBT) individuals are covered under Title VII under sex discrimination.

▶ On the benefits side, to the extent such employer health plans are self-insured the employer may exclude same-sex spouses from coverage if the plan provides for such exclusion.


Supreme Court Gay Marriage Case▶ If the health plan is an insured plan, the state insurance law will control the issue.

▶ Case-law is eventually expected requiring such coverage on a federal basis.

▶ Domestic Partner coverage option is expected to slowly be removed by plans.

▶ Tips: ▶ Review with their plan administrators and advisors if changes to benefit plan

documents are needed for compliance or the employer’s wishes (if the plan is self-insured).

▶ Consider modifying FMLA, EEO, and other applicable policies (e.g., bereavement leave) in employee handbooks.


Supreme Court Rules on 401(k) Fees Case

▶ May 18, U.S. Supreme Court rules on Edison International▶ In 1999 and 2003 company trustees added three mutual funds with very high fees

when nearly identical funds were available at lower costs▶ Supreme Court ruled that “a trustee has a continuing duty—separate and apart

from the duty to exercise prudence in selecting investments at the outset—to monitor, and remove imprudent, trust investments.”

▶ Under ERISA, fiduciary claims normally have a 6 year statute of limitations.▶ However, the Court said in Edison International, that claims against a trustee’s

poor picks of 401(k) funds with high fees go beyond the initial point of time of picking funds. The subsequent reviews of fund picks and the obligation “to remove imprudent investments within a reasonable period of time” essentially resets the 6 year clock.

▶ 9-0 decision▶ Tip: Company officials/trustees who pick investment funds for their 401(k) plans

should annually review and discuss with advisors the funds offered in the plan. This review should be documented.


HR Trends Survey

▶ May 2015 data, PIA members▶ 33% of firms have set an overall wage budget increase for 2016

▶ Avg. = 2%

▶ Based on current business conditions, wage increase projection has decreased from budget, Avg. = 1.4%

▶ 2015 overall change in wages, Avg. = 1.4%▶ 72.7% experienced an increase in health care premiums for 2015

▶ Avg. increase, 11.4%

▶ Tactics firms used to keep health care costs down in 2015▶ 47.8%, change plan design▶ 34.8%, changed carriers▶ 17.4%, other


HR Trends Survey

▶ Incentive Plans Used▶ Employee Referral, 50%▶ Profit Sharing, 45.5%▶ Good Catch, 22.7%▶ Production, 18.2%

▶ What share of factory payroll are temps used?▶ Less than 5%, 70.8%▶ 5-9.9%, 8.3%▶ 10-19.9%, 4.2%▶ 20-20.9%, 12.5%


HR Trends Survey

▶ Most Effective Source of Recruiting for Production EEs ▶ Employee Referral, 43.8%▶ On-Line Job Banks, 28.1%

▶ Most Effective Source of Recruiting for Sales EEs ▶ Employee Referral, 35.5%▶ On-Line Job Banks, 19.4%▶ LinkedIn, 12.9%▶ Local Recruiter, 9.7%

▶ Most Effective Source of Recruiting Management & Administrative EEs▶ On-Line Job Banks, 41.9%▶ Employee Referral, 22.6%▶ LinkedIn, 9.7%


HR Trends Survey

▶ Most Effective Source of Recruiting for IT EEs ▶ On-Line Job Banks, 35.7%▶ Employee Referral, 21.4%▶ LinkedIn, 10.7%▶ Local Employment Agency, 7.1%

▶ Top 3 Most Difficult Positions to Recruit for▶ Sales▶ Press Operators▶ Bindery Operators

▶ HR Staff▶ 1 FTE per 100 employees


Impact of NLRB Election Rule Changes▶ New rules took effect April 14▶ Takes elections from typical 42 days from petition to election to as little as

10 or 14 days▶ From April 14 to June 29, 545 RC petitions filed (14.5% increase over

same period last year)▶ Avg. unit size = 61▶ Most petitions filed in Region 2 (NY/northern NJ) and Region 29 (Long

Island, NY)▶ Top 3 industries with petitions (Healthcare, Construction, Transportation)▶ Union win rate = 68% (no change compared to 2014)▶ Avg. time to election = 24 days (manual ballots)▶ No GCC/IBT petitions filed since April 14▶ Only two GCC/IBT RC elections this year, 50% win rate so far

▶ PIA member won in LA, CA by 4-1 margin

▶ GCC/IBT lost 2 RD elections (2 small units at 1 firm)


State Law Update: Wisconsin

No news is good news.


State Law Update: Illinois

▶ Illinois enacts Veterans Preference in Private Employment Act

▶ allows an employer to voluntarily establish a preference for hiring veterans as long as there is a publicly posted policy (i.e., lobby, website, etc.) that is applied uniformly for all employment decisions regarding the hiring, promotion or retention of employees.

▶ applies to veterans of the five service branches, their reserve components, and the Illinois National Guard

▶ effective on January 1, 2016.

▶ http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=099-0152


State Law Update: Indiana• New Hire Reporting

• Newly hired employee” means an employee who • (1) has not previously been employed by an employer; or • (2) resumes service with an employer after a separation from service of at least 60 days (Sec. 22-4-10-8, added by P.L. 69 (H. 1601), L. 2015).

▶ Veterans’ Preference, new The state has enacted a law allowing private employers to have a veterans’ preference policy (S. 298, L. 2015, effective July 1, 2015).

• Protective orders. Effective July 1, 2015, an employer may not terminate an employee from employment based on (Sec. 1, H. 1159, L. 2015):

• (1) the filing, by the employee, for a petition for a protective order for the protection of the employee, whether or not the protective order has been issued; or

• (2) the actions of an individual against whom the employee has filed a protective order.


Overtime Regulation Background▶ President Obama Memo to Dept. of Labor/Wage-Hour Administration, March 13,

2014, directing DOL to “modernize and simplify” the regulations defining which white collar workers are protected by the FLSA’s minimum wage and overtime standards.

• Regulation last updated in 2004

• Focus (in press) has been on retail/hotel/food service (union/SEIU influence)

• DOL Blogs (7/1) focus on retail managers working 40-70 hours a week without overtime (don’t mention annual salary, but focus on current salary threshold is $23,660 – since 2004)


Salary Limits• DOL says in 1975 62% of FT workers eligible for OT, today 8%• DOL concluded that 2004 salary level was set too low ($23,660) for Exec, Admin

& Professional exemption tests• Approx. 4.6 million salary workers will be affected in Year 1

• 5.1 to 5.6 million affected in Year 10 (with annual threshold increases)

• DOL is using BLS Current Population Survey, Weekly Income figures from 2013• “Full-Time” is 35 or more hours per week (not 30 as under ACA Why??)• Income figures from CPS includes OT, commissions and tips• CPS done monthly

• Proposed salary minimum is 40th percentile is $921/week or $47,893/year (2013)• A 102.4% increase

• However, DOL projects the 1st Quarter 2016 figure will be $970/week or $50,440.• Proposes to annually adjust to BLS Current Population Survey or CPI-U (salary

test and highly compensated)

▶ DOL says that “by reducing the number of workers for whom employers must apply the duties test to determine exempt status, this proposal is responsive to the President’s directive to simplify the exemption.”


Salary Limits (Highly Compensated Exempt Test)• In 2004 set at $100,000 “if the employee customarily and regularly performs any

one or more of the exempt duties or responsibilities of an executive, administrative or professional employee”

• Proposal is to set High Compensated test to employee annual compensation level equal to the 90th percentile of earnings for full-time salaried workers ($122,148 annually). A 22.1% increase.

• DOL estimates that 36,000 employees today might be affected by the proposal in Year 1 (Year 10, 33,000 to 42,000 will be affected)

• Proposes to annually adjust to BLS Current Population Survey or CPI-U

• $122,148 ($2,349/week) is based on 2013 BLC Current Population Survey• 2014 annual 90th percentile is $124,394 ($2,392/week)• 1st Quarter 2015, 90th percentile is $130,364 ($2,507/week)• No 1st Quarter 2016 projection provided


Salary Limits Questions/Concerns• Annual CPS Weekly Income numbers available in late January

• How much advance notice will employers receive on annual updates?• Proposal says DOL will publish revised salary levels annually “at least 60 days before

the updated rates would become effective” (p. 38540)

• Will there be a lag using previous year’s data? Proposal doesn’t hint at one….• Since CPI-U is subject to revision twice annually, that can be a problem (Plus, CPI-U it

has its critics. Methodology changed periodically.)• CPI and CPS Weekly Income Figures do go down, so will the salary threshold(s) also go

down as well?

• CPI-U or CPS? • DOL says they “produce roughly equivalent…. past evidence suggests that updating the salary level

using the CPI-U would result in comparable salary level….” (emphasis added) (p. 38541)


Printing Industry Salary Data, 2014

Customer Service Rep# of Co.

# of Ee Avg Lowest Q1

Median/ Q2 Q3 P90 Highest

All Participants348 1004

$45,610 $16,000 $36,420 $44,000 $53,000 $62,350 $113,000

Prod. Planner/Scheduler# of Co.


Median/Q2 Q3 P90 Highest

All Participants 206 345 $55,752 $18,200 $45,000 $53,518 $63,152 $75,000 $141,812

Estimator# of Co.




Shipping/Receiving Manager# of Co.




North East 31 32 $53,744 $26,000 $40,040 $50,000 $60,762 $75,000 $100,000South East 14 15 $39,655 $17,222 $32,000 $37,956 $46,000 $55,000 $63,000

North Central 61 69 $56,047 $30,000 $45,075 $55,000 $63,000 $78,434 $101,000South Central 45 46 $52,696 $25,875 $40,000 $52,000 $60,320 $71,476 $99,000Western 26 27 $48,382 $27,600 $40,000 $48,000 $55,250 $65,000 $71,006


Employer Costs (According to DOL) “It’s Only Money”3 employer “direct costs:1. Regulatory familiarization costs;2. Adjustment costs; 3. Managerial costs.

▶ DOL estimates that average annualized direct employer costs will total between $239.6 and $255.3 million per year, depending on the updating methodology used

▶ In addition to the direct costs, the proposed rule will also transfer income from employers to employees in the form of higher earnings.

▶ Average annualized “transfers” are estimated to be between $1.178 and $1.271 billion


Duties Tests▶ Surprisingly, DOL is not making proposed changes to any of the

exemption tests (Executive, Administrative, Professional, Outside Sales, or Computer Professionals)

▶ Seems odd given that DOL conducted several “listening sessions” from employees, employers, associations, employee advocates, unions, etc. Issues discussed included:

1. Appropriate salary level for exemption?2. What, if any, changes should be made to duties tests?3. How can the regulations be simplified?


Duties Tests▶ DOL is seeking public comments on whether the tests are working as

intended to screen out employees who are not bona fide exempt employees;

▶ in particular, DOL is concerned that in some instances the current tests may allow exemption of employees who are performing such a disproportionate amount of nonexempt work that they are not exempt employees in any meaningful sense. (targeting retail/hospitality)

▶ DOL believes the 40% weekly income threshold is sufficient and any lower would require a return to a more rigorous duties tests (similar to prior 2004)


Duties Tests Dilemma

▶ Do employers seek changes? If so, what?

▶ Does anyone really think that an Obama DOL/WHD will do employers any favors?


Duties Tests Dilemma ▶ What will employee groups (unions/academics) be suggesting?

▶ Look to prior issues

▶ Executive (retailers/hospitality/restaurants, 50%+ non-exempt work)

▶ Professional▶Accountants/Audit Associates deemed exempt

▶ Outside Sales (define “sale” – e.g., pharmaceutical prescription drug sales, Christopher v. SmithKline Beecham Corporation, 2012, U.S. Supreme Court)

▶ Computer Professionals (raise salary threshold)

▶ Highly Compensated Employees ($122K is too low)


Duties Tests Dilemma ▶ What will employee groups (unions/academics) be suggesting?

▶ Administrative ▶ Insurance Adjusters consistently deemed exempt by the courts▶Purchase Agents, motor home manufacturer, exempt under 2008 DOL Letter of Interpretation (“have the ability to stop or start the production line”), www.dol.gov/whd/opinion/FLSA/2008/2008_03_06_01_FLSA.pdfBody Shop Estimators deemed exempt, Caveness v. Vogely & Todd, Inc., 2011 U.S. Dist. LEXIS 98144 (M.D. Tenn. Aug. 30, 2011)


Duties Tests Dilemma

▶ Concern: Despite not proposing any changes to the duties tests, DOL could still get away with making changes later in the final rule without issuing a second proposal for public comment.

▶ National Restaurant Association v. Solis, 870 F. Supp. 2d 42, May 29, 2012 (DC District Court) http://tinyurl.com/nq4wufv

▶ DOL “complied with the (Admin. Procedures Act) notice requirements when it conducted this rulemaking exercise (tip credits), and the public was fully and specifically informed of the subject matter under consideration”


Duties Tests Dilemma ▶ For the Printing Industry, CSRs have always been a question mark for

exemption▶ Administrative – “discretion and independent judgement with respect

to matters of significance” (Authority to stop a job in production)

▶ State issues come into play as well (California, CSRs get overtime)

▶ DOL enforcement consistency has been an issue, for example▶One DOL Wage/Hour investigator said a CSR job description was Exempt (authority to stop a job anywhere in production)

▶Another said it was Non-Exempt a few years later (using same job description)


541.203 CSR Opportunity▶ DOL is considering adding to the regulation examples of additional

occupations that are exempt, with specific criteria. (p. 38543)

▶ Remember Purchase Agents a few slides ago??▶ Purchase Agents, motor home manufacturer, exempt under 2008 DOL Letter of Interpretation

(“have the ability to stop or start the production line”)

▶ 541.203(f) currently says…. “Purchasing agents with authority to bind the company on significant purchases generally meet the duties requirements for the administrative exemption even if they must consult with top management officials when making a purchase commitment for raw materials in excess of the contemplated plant needs.”

▶ Do your CSRs ever farm out work?


State Law Considerations

▶ Since the Duties Tests do not have any proposed changes, only the salary thresholds come into play.

▶ If a state’s requirements are stricter, then state law applies. Interaction between the two can be a problem, but typically lawsuits only address one or the other

▶ 20 states have their own exemption/non-exempt overtime rules▶ http://www.printing.org/page/3437


Commenting on the Regulation, Ideas/Suggestions▶ An immediate 100%+ salary threshold will a painful shock to employers (from $23,660 to

$47,893 (102% increase) or $50,440). It will cost jobs and hurt many firms with that operate with slim profit margins

▶ Rather than use the 40th percentile is $921/week or $47,893/year (2013) as a salary test, use the 20th percentile level ($645/week or $33,540/year)

▶ Or, DOL should consider phasing in the salary threshold instead, for example, 20th

percentile, 30th percentile, then 40th percentile.

▶ Leave the “duties tests” for all the exemption classifications as they are (Exec, Admin, Prof, Outside Sales, Computer) (p. 38543)

▶ While not perfect, changes are likely to cause serious disruptions and needless litigation. ▶ This includes leaving the amount of time performing exempt work that is their primary

duty, even if non-exempt work is being done concurrently (California). (p. 38543)▶ No minimum standard should be imposed for non-exempt work that could be performed

in a week (flexibility is needed, particularly when non-exempt employees take sudden/unexpected leave, e.g., intermittent FMLA) (p. 38543)

▶ DOL should not reintroduce the long/short-duties tests (p. 38543)▶ If DOL plans to change the duties tests for the various exemptions, then it should issue a

second proposed draft regulation for public comment.


Commenting on the Regulation, Ideas/Suggestions

▶ Allow non-discretionary bonuses to be included in the salary threshold test (as stated by others during listening sessions, it gives an “ownership mindset”) Monthly payments are acceptable, but payments more frequent are unmanageable since monthly performance is typically tracked. (p. 38521)

▶ The proposed 10% of such non-discretionary bonus for the salary test should be increased to 20%. (p. 38536)

▶ Use the Current Population Survey Weekly Earnings index, not the CPI-U, for annual adjustments for the salary test and the Highly Compensated Employee test. The CPI-U is subject to two annual revisions and its methodology is periodically changed. Plus, DOL admits that the CPI-U data “suggests” that it would result in “comparable salary level.” (p. 38541)


Commenting on the Regulation, Ideas/Suggestions▶ Implement the annual adjustment on a 2 year lag to allow for BLS data revisions,

employer budgeting, comp plan design changes, etc. ▶ A 60-day notice period for annual changes is unrealistic. (p. 38540)▶ The DOL projection of a $50,440 1st Quarter 2016 level suggests that

employers will have to make mid-year changes in 2016. (p. 38517) Whole year data should be used (e.g., 2014 data used for 2016)

▶ The Highly Compensated Employee proposed level, 90th percentile of salary income ($123,000 – 2013) is appropriate.

▶ DOL’s consideration of using O*NET data to construct a model to identify occupations and probabilities for exempt determination should not be pursued. We have found O*NET data useful for academics for general occupational observations, but we do not think the database is detailed enough to accurately assist DOL in making predictions of exempt status for occupations. (p. 38590)


Commenting on the Regulation, Ideas/Suggestions▶ Customer Service Representatives/Account Managers in the printing industry are office

(nonmanual) employees who interact with customers and factory management over quality (company or customer standards) of a job and are the company’s representative to the customer. The CSR/Account Manager has management-operational authority to “stop a job in production”, or make other significant changes, which greatly affects the business operations. When exercising this authority the CSR/Account Manager is “exercising discretion and independent judgement with respect to matters of significance.” The CSR/Account Manager takes into consideration company or customer quality standards for a printing job which can cost $10s of $1,000s of dollars, production delays, significant overtime for the company, wasted materials (paper, ink, etc.), and missed customer deadlines. The CSR/Account Manager occupation should be added to 541.203 list of exempt occupations for the Administrative Exemption. (p. 38543)

▶ Note, PIA’s comments will cite WHD decisions that support the above▶ PIA suggests that if your CSR/Account Managers have this authority then specifically

mentioned it as one of the first items in the job description and be able to show proof that the authority was exercised (e.g., job tickets)

▶ CSR/Account Managers must know they have this authority

▶ For the above suggestions…▶ Comments? Agreement? Disagreement? Suggestions? Let’s talk about it.


Commenting on the Regulation▶ What are YOUR ideas and suggestions for comments?

▶ Comments due September 4, 2015 (60 days comment period), Final Regulation not expected until 2016 (might give us 90 to 120 days before implementation)

▶ PIA will have a sample letter that you may use to comment on the regulation on Tuesday, August 15. See www.printing.org/hr

▶ Former DOL/WHD officials have confirmed to us that DOL looks at comments not only for substantive comments, but as “yes/no votes.”

▶ Thus, every PIA member needs to submit comments. Use PIA’s generic comments or modify to tell your own story (which is more meaningful). www.regulations.gov

▶ The AFL-CIO is expected to get 10s of 1,000s of comments from its members▶ http://fix-overtime-pay.hq.afl-cio.serenity-v1.aflcio.org/

▶ Note: repeal of the regulation would not be possible under the Congressional Review Act unless a Republican is election President in 2016 (e.g., Ergonomics regulation, 2001)


What PIA Members Should Do?

1. Review fact sheet, FAQs, regulation, etc., at www.dol.gov/whd/overtime/NPRM2015/

2. Review PIA’s HR Flash Report, www.printing.org/hrflashreport3. Top management should meet with CFO and HR determine potential

effects of the proposal. Review the salary bands of employees to determine the effect of the proposed

changes on existing job responsibilities and titles. Proactively prepare a plan of action for bumping of salary for certain positions and/or

reclassification of positions from exempt to non-exempt status. Review, update job descriptions for accuracy and list exempt/non-exempt status

4. Determine whether to submit comments via PIA website or submit your own. (Pick 1-3 issues and outline how it would affect your business)

5. Review 2016 budgeting6. Recognize that nothing is final yet. Any proposal will not take effect until

2016 and may have a delayed effective date


Continuing HR Certification Institute Credit Information

This program has been approved for 1.0 hours of General recertification credit hours through the HR Certification Institute. Use of the seal is not an endorsement by the HR Certification Institute of the quality of the program. It means that this program has met the HR Certification Institute's criteria to be approved for recertification credit.

Program ID: 252687Title: 8-5-2015 HR Update & Overtime Reg Webinar Presenter: Jim KygerPIA Human Relations Department


Thanks for Listening. Questions??

Jim Kyger, SPHR, CCP, CBPAsst. VP of HR

Printing Industries of America Office: 571-335-4691Cell: [email protected]/hr

hr update & overtime regulation - glga€¦ · 5/8/2015 · an endorsement by the hr...

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