BACKGROUND
In July 2015, President Obama proposed more than doubling the salary level under which virtually all workers qualify for overtime pay whenever they work more than 40 hours in any given week. That threshold, now $23,660, would rise to $50,440. Obviously, this has tremendous impact on all businesses. For the golf business, it is not only potentially financially burdensome, but it will complicate work schedules, staffing and the like.
This notice of Proposed Rulemaking was published on July 6 and invited interested parties to submit written comments on the proposed rule on or before September 4, 2015. Since this time, the NGCOA has been gathering feedback on such impact from members, and working with allied association partners (GCSAA, CMAA, PGA and the National Club Association) to develop formal golf industry comments to submit by this deadline. The comments are below.
Unfortunately, despite these efforts and those of many other stakeholders, it is highly-probable (most say inevitable) that this rule will pass in some form or fashion; that’s why we are familiarizing NGCOA members with the intricacies of this topic, so that they may better manage through it and mitigate its effects on their businesses.
UPDATE (March 2018)
In the wake of court rulings putting a hold on the Obama administration’s 2016 overtime rule and the Trump administration’s signals that it will adopt a new overtime rule, the golf industry has maintained a strong interest in how this issue will be addressed by the federal government. The NGCOA and members of the We Are Golf Coalition submitted our comments to the Department of Labor addressing concerns with the proposed pay baseline for exempt employees, and offering our suggestions for meaningful change to support our workforce while supporting the industry’s growth.
UPDATE: Trump Administration Requests Extension in Overtime Lawsuit (January 2017)
On Jan. 25, the Trump administration requested an extension from the 5th Circuit Court Court of Appeals in which to file its reply to the State’s brief on the overtime lawsuit.
The U.S. Justice Department requested a 30-day extension of time, to and including March 2, in which to file its reply to the brief filed on behalf of the 21 states. The requested extension is necessary to allow incoming leadership personnel adequate time to consider the issues.
With Trump’s nominee, Andrew Puzder, withdrawing his nomination as Secretary, we await the President’s replacement. Whoever is chosen, it’s likely they will attempt to reverse some of the decisions from the Obama administration, including the overtime rule.
During an interview with CIRCA last August, the then-President-elect said, “We have to address the issues of over-taxation and overregulation and the lack of access to credit markets to get our small business owners thriving again. Rolling back the overtime regulation is just one example of the many regulations that need to be addressed to do that. We would love to see a delay or a carve-out of sorts for our small business owners."
Some believe that instead of full reversal of the rule, the administration will simply modify the rule exempting small business. But the only thing we are sure of is some form of change is forthcoming.
Congress is also considering its own action of revoking the regulations through use of the Congressional Review Act. In a recent article published by attorney Tim Garrett of Bass, Berry & Sims recently stated in an article for Law.Com, “the legal and political landscape has created uncertainty, and many employers wonder what to expect. A more detailed analysis is herein, but several strategies are being explored on both fronts, either to halt the rule in its entirety, or to modify its dramatic increase of the salary level to a more modest “phased-in approach.” Similar to Senate Bill S.3464, which proposed phase-in of $39,780 in 2018, $43,628 in 2019 and topping out at $47,476 in 2020.
When asked if the ruling means the new salary level will never go into effect, Garrett stated that the ruling only halts the effectiveness of the new salary level pending further action by the court or pending what occurs on appeal. It remains possible the new salary level could go into effect in the future. He further stated that there are signals that the DOL salary level test, as currently announced, will not take effect.
The NGCOA recommends members continue with their plan should the injunction be lifted. As noted previously, the salary test is only one part of the FLSA regulations which are used in the establishment of an “Exempt Employee,” the second is the Duties Test.
Many of golf industry’s exempt employees fall into one of two categories; Executive or Administrative. The Duties Test requires the exempt employees to not only be compensated at a rate not less than $455 per week, but also manage at least two full-time employee, manage a department or division of the business, with the authority to exercise discretion and independent judgement with respect to matters of significance.
The NGCOA will continue to monitor this issue and invite members to contact the Association office with any questions or for assistance in evaluating or administering the duties test.
UPDATE: Overtime Rule Stopped, Not Dead. What’s Next? (December 2016)
After hearing arguments from states, business groups and the U.S. Labor Department, Judge Amos L. Mazzant granted a nationwide preliminary injunction of the administration’s new overtime rule last month, which would have raised the Fair Labor Standards Act’s (FLSA) annual salary threshold for exemption from overtime pay to $47,476 from $23,660.
But, as expected, the DOL filed an appeal on Dec. 1, asking the court to overturn the decision. On Dec. 8, the Fifth Circuit of Appeals granted the DOL’s motion seeking an expedited briefing schedule on its appeal of the district court injunction of the overtime rule. The expedited briefing schedule issued by the court of appeals is:
~ The DOL’s opening brief was due Dec. 16
~ Amicus briefs in support of the DOL was due Dec. 23
~ The State’s response brief is due Jan. 17
~ Amicus briefs in support of the States are due Jan. 24
~ The DOL’s reply brief is due Jan. 31
~ Final oral arguments schedule is to be determined
The future of the overtime rule is also in flux outside the legal arena, as President-elect Donald Trump and republicans have vowed to reverse regulations they view as unfriendly to business.
While this appears to be favorable for the industry, it is important to realize that the DOL still has the “Duties Test” as a way to enforce the overtime rule. The NGCOA encourages members to review the elements of the duties test and ensure you have properly identified your exempt personnel. NGCOA will continue to follow this critical issue and keep you apprised if we see a reversal in the future.
UPDATE: Federal Judge Issue Injunction of FLSA Overtime Rule (November 2016)
Judge Amos L. Mazzant, III, of the U.S. District Court for the Eastern District of Texas has issued an injunction that delays the implementation of the DOL’s overtime rule. The judge ruled the Department of Justice overstepped their authority by raising salary cap below which all workers must receive overtime pay from $455 a week to $921 a week or $47,892 a year.
This was the key argument presented by the 21 states which joined the business groups, led by the U.S. Chamber of Commerce asking the court to consider a motion to issue a preliminary injunction that would halt the new regulation. Read a related article.
Update: Judge consolidates challenges to new overtime pay rule (October 2016)
A federal judge has granted approval to combine lawsuits presented by the U.S. Chamber of Commerce and 21 states that claim the U.S. Labor Department exceeded its authority in issuing new overtime rules. Both parties have requested their cases be expedited so relief can be granted before the implementation deadline.
Combining the cases will aid in efficiency for both parties, and it’s assumed this will help expedite the relief both parties seek.
It’s uncertain when the case will be heard. The NGCOA will continue to follow this case, along with any action the Senate takes up when they return from their recess. Members should not expect anything final before the Dec. 1 implementation deadline. The NGCOA recommends members continue to evaluate their wage practices and policies to ensure compliance of the new rule.
Update: Two Lawsuits Filed Seeking to Block New Overtime Rule (October 2016)
Twenty-one states, led by Texas and Nevada, filed a lawsuit last month challenging the U.S. Labor Department’s new overtime exemption rule changes. On the same day, Sept. 20, more than 50 business groups—including the U.S. Chamber of Commerce— filed a lawsuit of their own also challenging the rule.
Both complaints argue that the DOL’s regulations rely too heavily on the salary level, rather than the type of work performed, to designate exempt status. In their lawsuit, the states argue that the DOL’s rule could mean significant increases to employment costs for many state and local governments, in addition to private entities. The suit also argues the DOL’s rule disregards the FLSA and imposes “ a much-increased minimum salary threshold that applies without regard to whether an employee without regard to whether an employee is actually performing ‘bona fide executive, administrative, or professional’ duties.”
Any injunction blocking enforcement of the rule—which both lawsuits asked the court for—would be good news for employers, such injunctions are not easy to obtain. The NGCOA recommends members continue to evaluate their wage practices and policies to ensure compliance of the new rule. We will continue to follow these lawsuits, as well proposed Senate action, following its recess.
Update: Bill Introduced to Modify Overtime Rule (September 2016)
U.S. Rep. Kurt Schrader, D-Ore., has introduced recent legislation to address concerns over the U.S. Department of Labor’s new overtime rule.
The rule raised the salary threshold for employees who are exempt from overtime pay from $23,660 (or $455 per week) to $47,476 (or $913 per week) effective Dec. 1. Any salaried employee meeting the DOL’s criteria making less than $47,476 a year and working more than 40 hours a week will be entitled to overtime pay. The NGCOA, along with its allied associations, signed a letter to Rep. Schrader supporting his legislation.
But Rep. Schrader’s bill HR 5813, called the “Overtime Reform and Enhancement Act,” seeks to provide businesses, non-profits and universities with the time they need to plan and comply with the new rule. Essentially, it recommends a three-year phase-in of the salary threshold and eliminates the automatic indexing.
The NGCOA, along with its allied associations, signed a letter to Rep. Schrader supporting his legislation. While we supported the Republican-sponsored bills in the House and Senate, which required the Secretary of Labor to rescind the rule's release and re-evaluate the impact, this recent proposal provides for a greater chance of gaining support from both parties.
With Congress on recess and returning to our communities, take this opportunity to reach out to your representative and let them know the impact of the pending rule to your business. Encourage their support of this common-sense approach to overtime reform by becoming a co-sponsor of HR 5813.
Update: Department of Labor Releases Final Overtime Rule (June 2016)
At the end of May 2016 the White House released the final overtime rule, which the Administration says will extend overtime eligibility to more than four million workers. The rule, which will take effect Dec. 1, significantly increases the minimum salary level for salaried employees to qualify as exempt from overtime pay requirements. The rule now sets the minimum salary level for salaried employees at $47,476, up from the previous $23,660. Employers may use a combination of base salary and bonuses to determine total salary, however the base must equal no less than 90 percent of their total earnings. This rule will not affect employees currently identified as non-exempt from overtime. The Department did not make any changes to the “duties test,” which defines those positions eligible for overtime exemption.
This rule will have a dramatic effect on the golf industry. Positions may include assistant golf professionals, food and beverage managers, assistant golf superintendents, and other operational supervisors. Operations which operate six months or less may be eligible to claim an exemption under the “Seasonal Amusement or Recreational Establishments” exemption. The NGCOA has reached out to the Labor Department and requested clarification of this act — created in 2008 — to ensure it is still in effect. We will provide an update in our next IMPACT.
Though limited in their options to comply with the law, employers can:
- Pay time-and-a-half for overtime work."
- Raise workers pay above the new threshold.
- Limit employees' hours to 40 per week.
- Or some combination of the above.
While the NGCOA fully supports ensuring quality staff members are fairly compensated for their work, we believe this new rule goes too far. We will continue to work with legislators to gain their support of bills currently in the House and Senate. This legislation will require the Labor Department to rescind this rule and establish common sense pay rules which support and promote small business workforces. We encourage NGCOA members to reach out to their Senators and Representatives and encourage them to co-sponsor bills S. 2707 and H.R. 4773.