F&I and Showroom, January 2017

www fi magazine com 28 F I and Showroom January 2017 O On Nov 22 just a little more than a week before an important new overtime rule was set to take effect a federal judge in Texas issued a nationwide injunction that blocked the rules implementation This injunction was a result of 21 states and various business organizations filing lawsuits against the Department of Labor DOL If not for the ruling the new rule would have more than doubled the minimum salary threshold level from 455 per week to 913 for exemption from overtime pay under the Fair Labor Standards Act The judge concluded the DOL has the authority to implement rules regarding what job duties qualify for an overtime exemption but only Congress has the authority to implement changes to the salary threshold Overall this is welcome news for car dealers Unfortunately the timing of the injunction came at the tail end of a months long effort by car dealers to become compliant The DOL has already filed an appeal and a motion to expedite the process If its successful the rule could possibly be applied retroactively to Dec 1 However the clock is ticking as inauguration day approaches As of this writing Presidentelect Donald Trump has not tapped a new labor secretary Even if the court decides to take action before then theres no telling what the new administration will do with the rule when they take over They could scrap it scale back the salary threshold or even carve out a small businesses exemption In the short run dealers who proactively took steps to comply with the rule are left in a very precarious position You are not yet required to increase an employees salary above the threshold to maintain their exemption status nor reclassify workers who fell below the threshold and pay overtime So if you have already implemented changes or announced changes that would take effect on Dec 1 what should you do now TO PAY OR NOT TO PAY How you decide to move forward will depend on your dealerships culture and your relationship with your employees If only a few are affected you may feel the potential damage to morale caused by turning back may not be worth the cost savings It is easier to bump employees who received a base salary over the minimum threshold But do you really want to commit to paying overtime when you are not legally required to do so Once you commit it will be very difficult to go back If you are in a larger dealership your bottom line will be significantly impacted by the rule So you may want to roll back to your original pay plan and wait to see how this plays out in court Understanding the impact of this option on negatively impacted employees and displaying empathy when communicating your strategy with them will go a long way Those who were told they would now be eligible for overtime or receive a salary boost to push them above the threshold are going to be the groups whose morale is hit the hardest If you are worried about the impact on the affected employees an honest oneon one conversation may be your best bet If you do roll back their salary keep in mind that some states have mandatory advance notice requirements related to wage changes For other employees who were under the threshold including those who dont usually work overtime or who had their rates reduced to minimize the impact of the new overtime pay rules this may be welcome news They were not going to be earning any extra money as a result of the new rule but they would be taking on an extra burden of punching a clock and losing many of the freedoms their professional exempt counterparts enjoy Keep in mind that the rule only impacted the salary threshold In order to be exempt from overtime employees still have to pass the duties test which means their primary job duties must consist of executive administrative or professional duties as defined by the DOL If you had employees who were questionable on passing the duties test this is a great time to reclassify them without raising too many red flags ABOUT THE AUTHOR Dave Druzynski is the human resources director at Auto Mate Dealership Systems Email him at dave druzynski@ bobit com Addressing the Overtime Rule Delay The new overtime rule is on hold Now what Human resources expert unpacks the big decision dealers have to make this month BY DAVE DRUZYNSKI MANAGEMENT ISTOCKPHOTO COM VINNSTOCK