Around the legal world in 30 minutes

November 1, 2016

Editor’s Note: On Sept. 23, 2016, Michael Zinser presented two flash sessions during NNA’s 130th Annual Conference in Franklin, TN. This article summarizes his presentations.

 

By L. Michael Zinser
President | The Zinser Law Firm, P.C., Nashville, TN

A major topic on many conference attendees’ minds is the new overtime rule finalized by the U.S. Department of Labor last May and set to become effective on Dec. 1, 2016. When the final rule becomes effective, the standard salary threshold will increase from $23,660 to $47,476 per year. Employers will be able to count non-discretionary bonuses and commissions toward as much as 10 percent of the standard salary threshold.

Every three years, the salary threshold will increase, beginning Jan. 1, 2020. Each update will raise the threshold to the 40th percentile of full-time salaried workers in the lowest wage census region. New salary levels will be communicated 150 days in advance of their effective date. The next update will be announced on Aug. 1, 2019.

Although the final rule still may be challenged, every employer must be developing a plan now to address this huge budgetary issue. I recommend the following action plan to address the standard salary threshold increase:

Identify all employees currently classified as salaried exempt, but paid less than $47,476 per year (or $913 per week). Every employer will need to make a decision regarding whether to reclassify these individuals as non-exempt under the new rule or increase their salaries to $47,476.

Consider whether any of these employees would be eligible for exemptions, such as the creative professional exemption for journalists and the 13(d) exemption for district managers engaged in the delivery of newspapers to home subscribers.

Develop a new compensation plan. If your company chooses to reclassify the employees as non-exempt, consider tracking their hours to determine just how many hours per week they currently work. Will post-conversion pay and working hours replicate an employee’s current situation, or will you need to restrict schedules at or near 40 hours? Will you need to reassign certain tasks to other employees?

Consider a cost-neutral solution, under which you set the employee’s hourly rate at a level that assumes a certain amount of overtime, resulting in the same annual compensation currently earned by that employee.

Train the reclassified employees. These employees will have to be trained on timekeeping procedures at your company. They have not been accustomed to tracking their time. Now, it will be crucial legally that they do so. 

Carefully consider the consequences of your actions. If you convert a current salaried manager to an hourly employee, what is the psychological impact? Will he/she identify more with non-supervisory employees and quit thinking like a manager?

Do not forget about the discrimination laws. For example, a plan that increased the current male managers’ salaries but converted a female manager to hourly would draw fire as discriminatory.

Develop a communication strategy now. Chances are good that many of your current salaried employees have anxiety about whether they are going to get a pay increase or get reclassified as hourly employees. A good communication plan identifies who will deliver the news to the employees, and when the news will be delivered.

On Sept. 20, 2016, a coalition of more than 55 Texas and national business groups, including the U.S. Chamber of Commerce, filed a lawsuit in federal court in Texas. The lawsuit asks the court to vacate and set aside the Department of Labor’s new overtime rule, set to take effect Dec. 1, 2016. It also asks the court to issue an injunction, postpone the effective date of the overtime rule, and to maintain the status quo, pending the court’s review of the lawsuit.

A second lawsuit was also filed by the attorney generals of Nevada, Texas and 21 other states to enjoin the new rule.

The lawsuit filed by the business groups argues that the overtime rule exceeds the authority of the DOL, that it is arbitrary and capricious, contrary to procedures required by law, and otherwise contrary to law. The new overtime rule defies the mandate of Congress to exempt executive, administrative, professional, and computer employees from the overtime requirements of the Fair Labor Standards Act. The rule raises the minimum salary threshold so high that it is no longer a plausible proxy for the categories exempted by Congress.

Additionally, several bills have been introduced to try to stop or modify the rule. The Overtime Reform and Enhancement Act, introduced as H.R. 5813, has been proposed to limit the Department of Labor’s final rule on overtime.

During my flash sessions, the next major topic discussed was independent contractor status. This continues to be a major concern for newspapers, with respect to newspaper carriers and freelance writers and photographers. It is important to have a written contract with freelance writers and photographers, documenting not only independent contractor status but also preserving for publishers the right to reuse and repurpose the material.

The final topic discussed was union organizing in the newspaper industry. Union organizing has long been dormant in this industry. In August 2016, the NewsGuild organized the reporters at the Lakeland (FL) Ledger by a vote of 22 to 3. The following month, the same union organized the Newsroom at the Sarasota (FL) Herald-Tribune by a vote of 22 to 16.

The overwhelming number of people who attended the flash sessions owned or worked for union-free organizations. There was great interest in the discussion of how to maintain a union-free environment. There is much that management can do legally to oppose unionization at the newspaper. As the U.S. Court of Appeals has stated, “Every Employer has a perfect right to be opposed to a union.”

 

Michael Zinser is the President of The Zinser Law Firm, P.C. in Nashville, TN. The Zinser Law Firm represents more than 250 newspapers across the country, from Hawaii to New York.

 

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