CMAA

Legislative &

Regulatory Update

July 10, 2016

DisclaimerThis information is provided for informational purposes only. The contents are presented with no warranty, either expressed or implied the Club Managers Association of America. No legal responsibility is assumed for the outcome of decisions, commitments or obligations made on the basis of this information. If your club is faced with a question concerning legal issues, you should contact the club’s legal counsel for the specific application of the law to your situation.

Today’s Presentation

Overtime Rule Changes

Independent Contractors

Waters of the US

New Advocacy Resources

Questions?

Overtime Rule Changes March 2014 – Presidential Memorandum to

Department of Labor Highlighted eroding value of the salary exemption

and the number of managerial workers who are not eligible for overtime under existing regulations.

Three Directives:1. Update existing protections in keeping with the

intention of the Fair Labor Standards Act.

2. Address the changing nature of the American workplace.

3. Simplify the overtime rules to make them easier for both workers and businesses to understand and apply.

2004 Regulations Regulations last updated in 2004

Salary Requirement: $455 Weekly

Exemptions: Executive, Administrative & Professional (Learned or Creative)

Highly Compensated EmployeesDefined as those performing office or non-manual work and paid total annual compensation of $100,000 or more (which must include at least $455 per week paid on a salary or fee basis) are exempt if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee. (Note: An HCE generally does not meet all of the duties tests for exemptions.)

http://www.dol.gov/whd/overtime/fs17a_overview.htm

How We Got Here

March 2014 – Presidential Memorandum

to Department of Labor, citing “eroding

value”

July 6, 2015 – DOL published Notice of

Proposed Rule Making

September 4, 2015 – Comments Due

May 17, 2016 – Final Rules Released

Final Rules - Threshold

Establishes the standard salary level at the

40th percentile of weekly earnings for full-

time salaried workers.

Increase from $455 a week (or $23,660

annually) to about $913 a week (or

$47,476 annually) in 2016.

$3,000 less than original proposal, used

lowest wage area, the South

Final Rules – HCEs

The total annual compensation

requirement needed to exempt highly

compensated employees (HCEs) will

increase to the annualized value of the

90th percentile of weekly earnings of full-

time salaried workers (or $134,004

annually).

Nationwide statistic

Final Rules – Annual Updates

Establishes the process for an automatic

update of the salary threshold every three

years to maintain the 40th percentile (or 90th

percentile for HCEs).

First update is slated for January 1, 2020.

At least 150 days prior, the DOL Secretary will

publish the new thresholds in the Federal

Register.

Final Rules – Bonuses &

Commissions

Employers may now use nondiscretionary bonuses

and incentive payments (including commissions) to

satisfy up to 10 percent of the new standard salary

threshold.

Amounts must be paid at least quarterly.

Employees must be paid at least 90% (~$822) of their

standard salary in any week in which they perform

any work.

Final Rules – Bonuses &

Commissions – How It Works

Employees must be paid at least 90% (~$822) of their

standard salary in any week in which they perform

any work.

At the end of the quarter, if the sum of the salary

paid plus the bonuses paid does not equal the

standard salary level for 13 weeks, the employer has

one pay period to make up for the shortfall (up to 10

percent of the standard salary level).

This “catch-up” payment will count only toward the

prior quarter's salary amount and not toward the

salary amount in the quarter in which it was paid.

Final Rules – Bonuses &

Commissions – Example Employee A is an exempt professional employee who is

paid on a weekly basis, and that the standard salary level test is $913 per week.

In January, February, and March, Employee A must receive $821.70 per week in salary (90 percent of $913), and the remaining $91.30 in nondiscretionary bonuses and incentive payments (including commissions) must be paid at least quarterly.

If at the end of the quarter the employee has not received the equivalent of $91.30 per week in such bonuses, the employer has one additional pay period to pay the employee a lump sum (no greater than 10 percent of the salary level) to raise the employee's earnings for the quarter equal to the standard salary level.

Final Rules – Bonuses &

Commissions for HCEs

For HCEs, an HCE must still receive the weekly set

salary level ($913 week).

Bonus and commission can only be used offset

annual salary requirements of $134,004.

Final Rules – Duties Testing No changes to the existing duties tests.

Existing Administrative, Executive and Professional

exemptions remain intact

Final Rules – Effective Date

December 1, 2016

Member Input Could impact all mid-management level positions

in a club.

Make clubs rethink how they pay employees.

Seasonal issues

Complicates payroll

Increase in costs for club, decrease in benefits for

employee and potential for fewer staff

Employee morale

Challenges to the Rule

Speaker Paul Ryan (R-WI)

released a statement

citing the rule as an

“absolute disaster for our

economy.”

Challenges to the Rule

National Golf Day, May 18

Challenges to the Rule The Protecting Workplace Advancement and

Opportunity Act, HR4773 and S2707

Congressional Review Act

Defunding

FAQs: Seasonal ClubsQ. We are a seasonal property open 8 months -is the $47,476 based on that or 12 months?

A. The new salary is $913 per week. During the eight-month period that employees work at your property, you will need to guarantee that at least $913 per week is paid for an exempt employee. Please see FOH 22g10 concerning rules for annual salary earned in a shorter period, which can be found at the following link: https://www.dol.gov/whd/FOH/FOH_Ch22.pdf.

FAQs: Bonus Payments

Q. With regard to the non-discretionary bonus

and catch up payment provisions, does

“quarterly” mean calendar quarter? Fiscal

quarter? Or is it up to the employer’s discretion?

A. No, it does not mean the calendar quarter. It

is the employer's discretion when the quarter will

begin.

FAQs: Holiday Bonuses

Q. Can an employer say that an Xmas bonus is part of your salary in effort to meet the new standard?

A. When the Final Rule takes effect on December 1, 2016, employers will newly be allowed to satisfy up to 10 percent of the standard salary level with nondiscretionary bonuses and incentive payments (including commissions). Nondiscretionary bonuses and incentive payments are forms of compensation promised to employees, for example, to induce them to work more efficiently or to remain with the company. By contrast, discretionary bonuses are those for which the decision to award the bonus and the payment amount is at the employer's sole discretion and not in accordance with any preannounced standards. An unannounced holiday bonus would qualify as a discretionary bonus, because the bonus is entirely at the discretion of the employer, and therefore could not satisfy any portion of the $913 standard salary level.

FAQs: State Differences

Q. How will this new rule affect Georgia?

A. The Fair Labor Standards (FLSA) provides minimum wage and hour standards, and does not prevent a State from establishing more protective standards. If a State establishes a more protective standard than the provisions of the FLSA, the higher standard applies in that State. To the extent the new minimum salary amount of $913 per week under the Overtime final rule is higher than the State requirement, the employer in that State must comply with the higher standard and pay not less than $913 per week for an exempt white collar employee.

FAQs: Clocking In/OutQ. We have salaried professionals whom are not scheduled at any time to work more than 40 hours per week. Do we have to track hours each week to verify that or if the schedule doesn't allow for more hours can we document their schedules and not have them do a time card?

A. If the salaried professionals are bona fide exempt employees as defined in 29 CFR Part 541.300, there is not a recordkeeping requirement. However, if the salaried professionals do not meet all the requirements for the exemption, including the salary level, there are recordkeeping requirements that can be found in 29 CFR Part 516, which would be applicable to them.

Furthermore, overtime-eligible workers are not required to punch a time clock. Employers have options for accounting for workers' hours - some of which are very low cost and burden. There is no particular form or order of records required and employers may choose how to record hours worked for overtime-eligible employees. For example, where an employee works a fixed schedule that rarely varies, the employer may simply keep a record of the schedule and then indicate the changes to the schedule that the worker actually worked when the worker's hours vary from the schedule ("exceptions reporting"). See Fact Sheet 21: Recordkeeping Requirements under the Fair Labor Standards Act (FLSA).

For employees with a flexible schedule, an employer does not need to require an employee to sign in each time she starts and stops work. The employer must keep an accurate record of the number of daily hours worked by the employee, not the specific start and end times. So an employer could allow an employee to just provide the total number of hours she worked each day, including the number of overtime hours, by the end of each pay period. The Department has material available to help employers figure out what method of recording hours works best for their workforce.

FAQs: OptionsEmployers have a range of options for responding to

the updated standard salary level. For each affected

employee newly entitled to overtime pay, employers

may: • Increase the salary of an employee who meets the duties test to at least the new salary level to retain his or her exempt status;

• Pay an overtime premium of one and a half times the employee's regular rate of pay for any overtime hours worked;

• Reduce or eliminate overtime hours;

• Reduce the amount of pay allocated to base salary (provided that the employee still earns at least the applicable hourly minimum wage) and add pay to account for overtime for hours worked over 40 in the workweek, to hold total weekly pay constant; or

• Use a hybrid of these options.

Next Steps

Evaluate your current salary and hourly structures.

Know who falls in and out of the final rules.

Make sure your Congressional representatives know where you stand on this issue: www.congressweb.com/CMAA

Stay tuned to CMAA for more information as it is develops.

The DOL will be issuing further guidance.

Resources DOL Guidance Website:

https://www.dol.gov/whd/overtime/final2016/

FAQs for Employers:

https://www.dol.gov/whd/overtime/final2016/general-

guidance.pdf

CMAA Legislative Report blog:

www.cmaa.org/legislative.aspx

Impact

Source: CMAA 2015

Compensation and Benefits Report (FY2014) – Powered by

Club Benchmarking

Food & Beverage Manager

Food & Beverage Manager

Bonuses/Commission

Golf or Tennis Professional

Spa or Fitness Professional

Membership Director

Assistant Golf Pro - Base

Assistant Golf Pro - Total

Assistant Tennis Pro - Base

Assistant Tennis Pro - Total

Resources State Laws: http://www.dol.gov/whd/state/state.htm

FLSA Advisor: http://webapps.dol.gov/elaws/flsa.htm

HCEs:

http://www.dol.gov/whd/overtime/fs17h_highly_com

p.pdf

CMAA Legislative Report blog:

www.cmaa.org/legislative.aspx

CMAA Reports powered by Club Benchmarking:

https://www.cmaa.org/surveys.aspx

Independent Contractors

July 2015 – DOL issues new guidance on

the misclassification of workers focusing

on the application of the Fair Labor

Standards Act (FLSA) and the multi-factor

“economic realities” test

Six Part Test Is the work an integral part of the employer’s

business? Does the worker’s managerial skill affect the

worker’s opportunity for profit or loss?

How does the worker’s relative investment compare to the employer’s investment?

Does the work performed require special skill and initiative?

Is the relationship between the worker and the employer permanent or indefinite?

What is the nature and degree of the employer’s control?

Guidance

Moreover, the economic realities of the relationship, and not the label an employer gives it, are determinative. Thus, an agreement between an employer and a worker designating or labeling the worker as an independent contractor is not indicative of the economic realities of the working relationship and is not relevant to the analysis of the worker’s status. See, e.g., Scantland, 721 F.3d at 1311

DOL Misclassification Initiative

26 states and the Internal Revenue

Service are working closely with the DOL

to share information and resources in an

effort to curb misclassification

DOL Misclassification Initiative

EPA’s Waters of the US Rule Rule alters the definition of “water” under

CWA – effective now

The definition of “water” has always included traditional navigable waters, interstate waters and territorial seas

Downstream water has also traditionally fallen under this definition – if it significantly affects the chemical, physical or biological integrity of navigable, interstate or territorial waters

This new rule now includes upstream water, too

EPA’s Waters of the US Rule “Tributaries” – they have a bed, banks, an ordinary

high water mark and a flow that goes, directly or indirectly, to protected waters (perennial, intermittent and ephemeral streams)

“Adjacent Waters” – they border, are contiguous to or are neighboring protected waters

Some ponds, creeks, etc. will be under EPA control with new permits needed before using chemicals and fertilizers

Exclusions for irrigation and artificial ponds, groundwater, puddles and storm water control features, but “dry land” requirement

EPA’s Waters of the US Rule

Litigation filed by 31 states - Stay granted

nationwide – currently arguing jurisdiction

Senate & House passed a Joint Resolution

of Disapproval January – vetoed by

President

CMAA Advocacy Resources

CMAA Advocacy Resources

Clubindustryvotes.org – CMAA’s Grassroots Advocacy website has a new partner with expanded information and abilities.

Through the site, all members will be able to easily access:

Federal legislation and regulations

State information (New!!!)

Federal and State Legislator information (New!!!)

Action alerts on CMAA-tracked issues

Non-partisan election and voter registration information

Georgia At a Glance

CMAA Advocacy Resources

Chapter Managing Directors and Legislative

Chairmen will have the opportunity to

collaborate with CMAA on state-related

Action Alerts (contact forms) and more.

This resource, coupled with the Legislative

Report and webinar series providing timely compliance information on the regulations

impacting clubs, will now comprise CMAA’s

robust advocacy initiative.

Your Questions?

ContactMelissa Low

melissa.low@cmaa.org

(703) 739-9500

Twitter: @ml286

CMAA Update

July 10, 2016