Local Employers Anticipate RNC Will Bring Challenges, Plan for “Business as (Mostly) Usual"

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After a full year of preparation, anticipation, and speculation, the big day (well, week really) is almost here for Cleveland. On the morning of Monday, July 18 employers and employees across the region will embark on their first official workday during the 2016 Republican National Convention (RNC).

Most news stories of late have focused on the uncertainty that businesses within the “Hard Security” zone are facing, but these anecdotal accounts are only part of the larger picture in terms of the impact that area employers are anticipating on their operations and on their employees.

To help fill in the rest of the story for the Northeast Ohio business community at large, ERC asked organizations to participate in a brief poll focusing on two major areas: (1) What changes to usual work arrangements are employers implementing for employees during the RNC? and (2) How significant of an impact are employers anticipating the RNC will have on basic daily work related activities?

Mostly Business As Usual

What we found is that on the whole, the majority of organizations (61%) are planning to go about business as usual next week. Perhaps not surprisingly, the most variation in work arrangements can be seen among those organizations that are immediately adjacent to the downtown security zones.

For example, 48% of the organizations in our survey located within a 1-mile radius of the official “Event” zone are offering most/some employees the option to work from home during the RNC. In contrast, 17% of organizations outside of this 1-mile radius are providing employees with this option.

Minimizing Travel through Downtown

However, even among those outside of the immediate downtown area, employers are clearly attempting to minimize travel through or into downtown, with several organizations indicating they would not be asking their east side employees to commute to the west side (or vice versa) and still others opting not to schedule work meetings in the downtown area during the week of the RNC. Of course, depending on the type of industry that your organization is in, these types of limitations may not be an option.

For example, participating organizations in the hospitality industry are, understandably, increasing, not decreasing the hours and demands on their staff to accommodate the expected demand for RNC crowds.

Although the methods that employers are using to adjust their work arrangements for the week of the Convention are varied and largely dependent on location and industry, there appears to be more agreement around the level of anticipated impact that the RNC will have on basic day-to-day work related activities.

In general, the vast majority of employers anticipate that their employees will be impacted (in many cases a great deal) in their ability to accomplish one or more work related activity the week of July 18-22.

Activities that will be impacted

The top three work related activities that participating organizations anticipate will be impacted by the RNC are:

  • Parking
  • Eating lunch or other meals outside the office
  • Sending/receiving delivers/mail.

A number of other activities were also reported, mostly involving restrictions on travel to/from clients or meetings. The only organizations that did not indicate their employees would likely be impacted in their daily work activities are significantly removed geographically from the downtown area, i.e. Mentor, Strongsville, Hudson, etc.

The good news is, employers are clearly aware of the potential impact and at the very least understand that employees are likely to face challenges in their workday.

However, while this survey data does illuminate additional expectations and concerns among Northeast Ohio employers across the region, exactly what impact the RNC will have on business operations (and as a result on the region’s workforce) is largely yet to be seen.

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Highly Compensated Employee Exemption: The Other FLSA Exemption

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highly compensated employee exemption highly compensated employee definition highly compensated employees

If you are like most employers in Northeast Ohio, as soon as the FLSA Final Rule was published back in May, your first step was to take a look at those employees on your payroll that make less than $47,476.

Embarking on this fact finding mission is a great place to start, but while employers are scanning their payroll records, there are two other dollar figures that are also worth a quick look to ensure full compliance with the Final Rule come December 1, 2016.

Although far less common than the Standard Salary Level change for Executive, Administrative, and Professional employees (EAP), employers will also need to assess the exempt status of any employees that fall under the “Highly Compensated Employee” (HCE) exemption.

How do I know if I have a “Highly Compensated Employee” (HCE)?

Currently, the dollar amount for the HCE is set at $100,000 annually, but under the new regulations this figure is increasing to $134,004 annually. However, as with the Standard Exemption, compensation alone does not determine the appropriate classification for an employee. The primary difference between the EAP exemption and the HCE exemption, apart from the salary cap, is the duties test itself.

For the HCE’s a “minimal duties” test is applied, which states—per the DOL’s own fact sheet on HCEs—that the minimum duties test is met if, “the employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee”.

While you may have many employees that meet the salary threshold, you may not have any employees that need to be categorized as HCEs. Instead, based on the job duties assigned to most of your employees making over the HCE salary threshold, these employees probably meet more than enough of the duties test to qualify as exempt under the EAP exemption. Again, given the six-figure salary number, in these cases, these individuals are probably more appropriately classified as “Executive” and therefore already fall under the EAP exemption.

What does the new Final Rule change for my HCEs?

Changes to employee classification resulting from the new compensation assessment for HCEs are likely mostly administrative in nature, but should still be reviewed in order to remain compliant. The only major change is the increased figure of $134,004. Also, keep in mind that these employees will also need to meet the new Standard Exemption level of $913 weekly in base salary (this can be in the form of either a set salary or fee per the regulations).

The requirement to meet the Standard Exemption level is no different, but the dollar amount itself has increased to fit the Final Rule. The rest, a minimum of $86,528 to be exact, would then come in the form of commissions and other nondiscretionary compensation/bonuses (also the same rule as before).

In addition, the HCE threshold will automatically update every three years to a level that meets the 90th percentile of annual earnings of full-time salaried workers nationally.

So who does this really impact?

Per initial estimates the changes to the HCE exemption will impact about 36,000 employees (in contrast an estimated 4.6 million workers will be impacted by the change to the Standard Exemption Salary increase) Again, the key numbers to look at here are any employees that fall between $100,000 and $134,004 annually.

As an example, if an exempt employee is currently making $120,000 annually and upon review of their job duties, does NOT fully meet the duties test for EAP employees, (and the employer chose not to increase their compensation to meet the new $134,004 threshold or restructure the makeup of their total compensation package to get to this number—there are lots of options!) then this individual’s status would need to change to non-exempt.

Disclaimer: ERC does not provide qualified legal opinions. Information obtained through the site and services should not be relied upon or considered a substitute for legal advice. The information ERC provides is for general employer use and not necessarily for individual application. ERC recommends that you consult legal counsel for workplace matters.

ERC Training provides FLSA Training which provides a high-level review of the law's elements and requirements.

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Preparing Your Workplace for the Unexpected

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Expecting the Unexpected

Luckily, apart from the Cavaliers breaking the 52-year championship drought for the city of Cleveland, the list of reasons that your company may need to, or as in the case of Wednesday’s Victory Parade, choose to, close its doors or grant large numbers of employees unexpected time off is very short.
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Begin the Conversation Now: Developing an FLSA Communication Plan

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Begin the Conversation Now: Developing an FLSA Communication Plan

The U.S. Department of Labor passed legislation regarding the FLSA Overtime Rule in 2016. This new ruling, which established a new salary threshold, effective December 1, 2016, prompts many organizations to reevaluate and update their policies and procedures in relation to employees who are currently classified as exempt.

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