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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Questions Answered About the Proposed FLSA Changes: Overtime Rule

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changing from non-exempt to exempt proposed flsa changes flsa proposed changes

Accurately categorizing your employees as “exempt” or “non-exempt” from the Fair Labor Standards Act (FLSA) sounds like a fairly straightforward task. But a closer look at the finer details of the FLSA can quickly turn an easy yes/no question into a complex, and somewhat subjective, analysis or job duties, titles, and compensation.

According to the U.S. Department of Labor’s (DOL) Wage & Hour Division, the current administration is looking to, “simplify the overtime rules for employers and workers alike,” specifically in the area of white collar exemptions, and has recently completed a comment period for new set of proposed overtime rules.

Although it is up for debate whether or not the proposed rules have achieved this goal of simplification, employers need to be aware of what these changes are and begin to prepare themselves for 2016 when some version of these rules are likely to be implemented.

What is changing (more than likely)?

The salary level required to be classified as an exempt employee for both standard and Highly Compensated Employees (HCEs) will increase.

The existing standard salary threshold to qualify as exempt, is set at $455 per week. The existing HCE threshold is $100,000. The proposed new rule sets the threshold for both categories based on average weekly earnings for full-time salaried workers. For standard salaried employees the 40th percentile mark will be used and for HCEs, the 90th percentile will be used. In terms of what these percentiles mean for setting actual dollar amounts, based on 2016 projections from the DOL the new thresholds will be $970 in average weekly earnings for the standard level and $122,148 annually for HCEs.

The bottom line: The specific dollar figures cited in the proposed language may be adjusted in the final rule, but in short, the salary amounts required to be considered exempt from the white collar overtime rules are going up in 2016.

Both salary levels (standard & HCE) will be scheduled to increase on an annual basis.

The numbers currently on the books have not changed since the last set of rule changes in 2004. The latest iteration of the white-collar exemption language will increase annually in one of two ways, either: (1) attaching directly to the 40th (standard) and 90th (HCE) percentiles of earnings for full-time salaried employees or (2) adjusting both levels based on inflation (CPI-U).

The bottom line: Instead of going through the rulemaking process to increase the exemption thresholds, they will go up on an annual basis—based on what statistic is still to be determined.

What else was being considered as part of the proposed rulemaking during the comment period?

The DOL was looking for comments on two additional items, but is not planning to make regulatory changes based on this feedback.

(1) The so called “duty test”, which is the next step in determining an employee’s exempt status, was also up for discussion. However, instead of implementing wholesale, official regulatory changes, the DOL was looking for additional examples of job titles and practical job duties that could be used as guidance for determining exemption status. (2) In addition, they were gathering opinions about whether or not nondiscretionary bonuses can/should be factored into the average weekly earnings of the standard salary calculation.

The bottom line: The DOL wants to gauge if the “duty test” is working as it should and provide more practical guidance to make it more objective. However, they don’t plan to incorporate any official regulatory changes regarding “duties” into the final rule at this time.

What can employers do to prepare?

Until the final rule is announced, the key for employers will be to begin gathering the information necessary to apply the new test once it is known. Not only will this head off any current misclassification that you may uncover in the process, but it also situates employers to act as soon as the DOL releases the final language.

First and foremost, employers may want to perform an internal audit of their job titles and descriptions to ensure that they are appropriately classified as exempt or non-exempt. While employers always make sure jobs are classified correctly at the outset, these duties can look very different a few years down the road.

As individuals and job duties evolve depending on the skill set of the employee, the needs of the organization, or even changes to technology, HR isn’t always kept apprised of these changes in a timely fashion.

Taking stock of exactly what duties are being performed and making any necessary changes to job descriptions on a fairly regular basis can help prevent misclassification. In the case of the proposed changes to the FLSA, going through this internal review process is particularly important for any non-exempt employees making more than the current $23,600 figure, but less than the new threshold.

The bottom line: Be prepared. There is some down time between the close of the comment period earlier this month and the expected announcement of the final rule in 2016. Make use of this time to gather the job duty information now, so you can act promptly and efficiently when the time comes.

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

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