Water heaters and boilers, residential and commercial, high efficiency and high output – Bradford White has the products you can count on for years of reliable service. We build water heaters in Michigan and boilers in New Hampshire. But no matter the location, each manufacturing facility is staffed with a highly skilled and experienced workforce. These people know how to design and build a great water heater and a great boiler. They do it every day. They do it for you. We have exactly what you need, everything you need, to get the job done and help you build a very long list of greatly satisfied customers. If what you do for a living involves water heaters and boilers, remember this – Bradford White is an American manufacturer that builds products for wholesale distribution to a dedicated group of professional Bradford White is the Official Water Heater and Boiler of the PHCC.
installers. These are your products. We are your Bradford White.
Built to be the Best
™
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©2016, Bradford White Corporation. All rights reserved.
www.bradfordwhite.com
UNEQUALED
QUALITY. WOODFORD MANUFACTURING COMPANY Excellence. Always. 800.621.6032 • www.woodfordmfg.com * If hose is removed
Woodford 17 series
The Woodford Model 17 drains automatically and won’t freeze.* And it’s made in the USA with unequaled Woodford quality. You cannot buy a more reliable faucet.
Fall 2016 | Maryland PHCC Contractor
[3]
maryland
Fall 2016
PHCC CONTRACTOR MAGAZINE
CONTENTS...... A Message From the PHCC National Association Executive Vice President 6 - Michael Copp: Preparing for Generation Z Forces of Nature Senior Editor - Diane P. Kastner Maryland PHCC Contractor Magazine is the official magazine of The Maryland PlumbingHeating-Cooling Contractors and is published four times annually. The Maryland PHCC does not necessarily endorse any of the companies advertising in this publication or the views of its writers. Maryland PHCC Contractor Magazine is designed and published by Blue Water Publishers, LLC. Articles and information published in this magazine may not be reproduced without written consent of The Maryland PHCC or Blue Water Publishers, LLC. Maryland PHCC reserves the right in its sole discretion to reject advertising that does not meet Maryland PHCC qualifications or which may detract from its business, professional or ethical standards. The publisher cannot assume responsibility for claims made by advertisers, content provided by the editor, or for the opinions expressed by contributing authors.
8
Do You Get an Annual “Checkup” For Your Business?
10
Maryland PHCC Calendar of Events
12
Plumbing Instructors Wanted
12
HR Lessons For Real Life: Tactical Answers for Situations You Face
17
2016 FLSA Changes: The New Overtime Rules
20
Maryland PHCC Introductory Membership Information
24
Maryland PHCC Membership Application
25
Put the PHCC Advantage to Work for You
26
ADVERTISER SUPPORT..... Bradford White 2 Charlotte Pipe & Foundry 11 FastEst 19 Kolbi Pipe Marker 19 Liberty Pumps 5, 28 Metropolitan Industries 13-16
For more information on advertising, contact Jim Aitkins Blue Water Publishers, LLC 22727 - 161st Avenue SE, Monroe, WA 98272 360-805-6474 / fax: 360-805-6475 jima@bluewaterpublishers.com
Rheem 27 Saniflo 9 T&S Brass 7 Taco 22, 23 Woodford Manufacturing 3
OFFICERS 2016...... PRESIDENT STEVEN M. SCHAEFER WESTMINSTER, MD (410) 876-6825 VICE PRESIDENT KATHARINE K. STRADLEY ELLICOTT CITY, MD (410) 442-2221 TREASURER FREDERICK WOLF BALTIMORE, MD (410) 327-4750 SERGEANT AT ARMS RONALD LLOYD COLUMBIA, MD 21046 (410) 203-2720
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DIRECTORS THOMAS KELLER ELLICOTT CITY, MD (410) 203-1741 (410) 203-2638 FAX TIMOTHY FELDMAN ELKRIDGE, MD (410) 536-5700 EDGAR W. ZEPP, IV CLARKSVILLE, MD (410) 531-6712 THOMAS ELLIOTT KINGSVILLE, MD (410) 344-6045
Maryland PHCC Contractor | Fall 2016
APPRENTICESHIP EDUCATION COUNCIL MEMBERS STEVEN M. SCHAEFER ADMINISTRATIVE CHAIR WESTMINSTER, MD (410) 876-6825 (410) 857-0011 FAX RONALD STIEGLER ELDERSBURG, MD (410) 876-6825 THOMAS KELLER ELLICOTT CITY, MD (410) 203-1741
KATHARINE K. STRADLEY ELLICOTT CITY, MD (410) 442-2221 EDGAR W. ZEPP, IV CLARKSVILLE, MD (410) 531-6712 (410) 531-5812 FAX
Locally Represented By: ROI Marketing, Inc. 800.441.8188 www.ROIMKT.com
Fall 2016 | Maryland PHCC Contractor
[5]
A Message from the PHCC National Association Executive Vice President, Michael Copp
Preparing for Generation Z
M
any of us talk about the more than 80 million Millennials, born between 1980 and 1995 who are “rapidly taking over from the baby boomers who are now pushing 60.” As organizational leaders, we must learn how to coach “a generation coming into the workplace that has grown up with the expectation that they will automatically win, and they’ll always be rewarded, even for just showing up.” In the meantime, a new “Generation Z” is coming of age and brings with them a different set of values and expectations that organizations must contemplate as the industry struggles with workforce shortages. Those born after 1995 differ from Millennials because they grew up watching Millennials work in underpaid and under-skilled jobs. This under-employed situation was in part because of the impact of the credit crisis in 2008 and also because many Millennials earned degrees in skills for which there was a low demand in the marketplace. Generation Z grew up during a time when 9/11 took place, the U.S. has been at war in Iraq and Afghanistan and the credit crisis I mentioned earlier. As a result, this generation is much less trusting of the political system and tends to be described as “realists.”
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Maryland PHCC Contractor | Fall 2016
The table below shows some general differences between these two generations. So, the workplace will soon be filled with workers who are Baby Boomers, Millennials and now Generation Z with very different values and expectations. While much as been researched about the first two groups, Generation Z brings some interesting characteristics to the workplace based on recent research: •
They “see themselves as entrepreneurial” given their proclivity toward being more independent. They want to make an impact and therefore want to start their own business—a trend that has been gradually rising with each new generation.
•
Work-life balance is [slightly] less important to Generation Z , “cited by 40% of Gen Z-ers vs. 54% of millennials.”
•
“There has also been a strong increase in focus on tech[nology] skills, which can be learned regardless of where you go to school or what you study.” (Katharine Lynn, Universum’s associate director of marketing and communications)
•
“53% of Generation Z prefer in-person communications over instant messaging or email.”
•
“Diversity will be an expectation of Generation Z.” They are not only tolerant but accepting because they are the most diverse generation in history.
•
They are less likely to pursue an advanced degree given the perceived availability of online alternatives.
•
Much like millennials, they expect to stay in their first job for no more than three years. Opportunity for advancement is critical for this generation.
We have to acknowledge that “Gen Z is still made up of mostly students -- and their relative inexperience may be influencing their expectations” (Lynn, 2015). However, their world perspective is different and organizations should prepare for when this
generation begins entering the workforce within the next five years. Recruiting this group of future workers will require new strategies given that they are thinking earlier about entering the workforce and already researching companies; looking for long-term career growth; want to understand clarity of purpose and meaningful contribution to society; and prefer visual platforms to learn more about your brand and value proposition for them (within eight seconds given their reduced attention span). Sources: http://www.cbsnews.com/news/the-millennials-are-coming/ www.bainbridgeconsulting.com www.crmtrends.com, US Census Bureau- 2012 http://money.cnn.com/2015/12/16/news/generation-z-work/ http://www.business2community.com/social-data/15-aspects-that-highlight-how-generation-z-is-different-from-millennials-01244940#bKsKPjoHF1P9D59h.97 https://www.shrm.org/hrdisciplines/staffingmanagement/articles/pages/tips-recruiting-generation-z.aspx
And we have the extensive product line to prove it.
WE KNOW
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Whether bidding on future projects or providing solutions for an urgent plumbing issue today, it’s critical to know you have the right resources in place. That’s why T&S offers a vast selection of high-quality products that are easy to install and built to perform for years to come. And with a full assortment of in-stock items ready for same-day shipping, it’s no wonder contractors everywhere rely on T&S when it matters most.
Visit tsbrass.com and learn more about how we’re partnering with contractors just like you. T&S plumbing products represented in Maryland by: Repsource Midatlantic - 804-550-0025 TSB_0592 2015 PHCC Pubs.indd 6
10:44 AM Fall 2016 | Maryland PHCC 12/18/14 Contractor [7]
Forces of Nature N
atural disasters can occur anytime, anywhere and can destroy years of hard work in an instant. With proper planning, their impact on your livelihood can be minimized. If you haven’t developed a disaster plan for your business, or need to update your current plan, the following steps may help.* Step 1 – Research your business’s exposures and the options available to minimize them. Step 2 – Create a disaster recovery plan. • Identify risks from natural and man-made disasters. • Classify operations critical to your business’s survival. • Document current employee contact information. • Know your key customers, suppliers, contacts, and vendors. • Establish information technology needs. • Determine your business’s financial needs following a disaster. Step 3 – Back up your plan. • Make it available anytime, anywhere. • Be sure it’s accessible even when you can’t enter your facility. • Print a copy, and also store it electronically. • Regularly back up vital data and records and store a copy off-site. Step 4 – Educate employees on the plan, and keep them informed of their responsibilities. • Test the business continuity plan periodically. • Encourage employees to also prepare themselves and their families for disasters. Step 5 – Periodically review, practice, and update your plan. A community cannot survive a disaster unless businesses survive, and businesses cannot survive unless their employees survive. Mother Nature doesn’t care who’s in her way. Developing a functional, practical disaster plan can help protect your business, your employees, and your future, and help you manage potential disasters with the confidence of knowing your business has prepared to carry on. As a member of the Insurance Institute for Business & Home Safety® (IBHS), Federated provides many valuable disaster and recovery planning resources to clients at no cost. The IBHS Disaster Safety website offers a ZIP Code tool to identify risks specific to a geographical region, and OFBEZ® business continuity tool to help even the smallest businesses plan for recovery. For more information, visit http://disastersafety.org, or contact your local Federated marketing representative or Federated’s Risk Management Resource Center at 1-888-333-4949.
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Maryland PHCC Contractor | Fall 2016
25 ft. (shut-off head)
30 ft. (shut-off head)
↑ 14 ft. ↑ and/or ←140 ft.→
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• Above the floor plumbing solution for applications where no drainage exists • Cost-effective system for any gray water application • Only 1" diameter discharge pipe • Pre-assembled unit with multiple inlets and incorporated check valves The pump that fits both your needs and under the sink!
• Unprecedented performance with quiet operation and compact design
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1-800-571-8191 A PUMP COMPANY SINCE 1958 Fall 2016 | Maryland PHCC Contractor
[9]
Do You Get an Annual “Checkup” for Your Business?
A
n annual physical examination by a medical professional not only gives us an opportunity to have an open conversation regarding our current health, it is also a chance to discuss necessary lifestyle changes to improve it in the coming year. Now, apply this same principle to your business. When was the last time you sat face-to-face with your insurance provider for a “checkup” of your business insurance and risk management programs? GET AN INSURANCE “PHYSICAL” As your business changes and grows, so do your business insurance needs. An annual review with your insurance professional is recommended to discuss changes since your last renewal. For example: • Have you purchased or sold buildings, personal property, or vehicles? • Have you experienced fluctuations in payroll or sales receipts as business conditions change? • Have you undertaken any new operations or developed new products or services? • Are there any new legal or regulatory issues affecting your business? • Do you have a key employee who would be difficult to replace? Federated’s marketing representatives use a review process called an Annual Client ReviewSM. This yearly conversation helps ensure that the protection you purchased last year is still adequate today, and is an opportunity to consider, for example, whether your policy limits are adequate. It also gives you and your insurance representative a chance to discuss insured and [ 10 ]
Maryland PHCC Contractor | Fall 2016
self-insured exposures, and any new or evolving exposures that can impact your current insurance program, like data compromise or cyber threats. An annual insurance review also can help you assess the services provided by your current insurance carrier. Are claims paid according to your expectations? Is the insurer still financially sound and stable? Are you receiving the level of policy service and proactive loss prevention support you want? YOUR RISK MANAGEMENT PROGRAM ALSO DESERVES A THOROUGH EXAM In addition to reviewing your insurance program, you should also expect your insurance professional to provide a thorough examination of your current risk management strategies. A risk management review can help identify new exposures or operations that should be addressed. Gauging the effectiveness of your current risk management plans and analyzing past claims experience will help you focus on preventive measures that can have the greatest benefit for your bottom line. An annual risk management review may also: • Help protect the future insurability of your business through loss control and fewer claims • Help reduce insurance premiums • Help manage the hidden costs associated with claims • a more favorable work environment, which can help attract and retain high-quality employees Regular reviews with your insurance provider are important for both your bottom line and for maintaining the health of your business, and can provide some peace of mind for the year ahead.
SO WE CREATED ONE FOR YOUR HANDHELD. At Charlotte Pipe, we use the latest technology to ensure you get what you need, when you need it. Our newest innovation is our Tech Tools app, featuring a toolbox with an expansion and contraction calculator, a temperature de-rating calculator and more. It’s a nice addition to the online technology we’ve been offering our customers for years. Like real-time inventory updates, order confirmation and shipment notification, and up-to-date scheduling information. We’re giving you the resources you need to get the job done right and on time. That’s been our system of doing things for over a century. And it’s a system that simply can’t be beat.
YOU CAN’T BEAT THE SYSTEM.®
Scan to download your free Tech Tools app. Fall 2016 | Maryland PHCC Contractor
[ 11 ]
Maryland Plumbing-Heating-Cooling Contractors, Inc. (410) 461-5977 (410) 750-2507 fax phccmd@aol.com
HELP WANTED! Maryland PHCC Education Council are now accepting applications for Instructors to teach in our Plumbing Apprenticeship program. Course information: Classes are held September through April, two evenings a week from 6:00 p.m. - 9:00 p.m., 55 sessions, 165 hours per year. The curriculum covers Related Theory Instruction, Trade Mathematics, and more. Instructors receive all Books needed to teach the course including a CD for Instructors with course highlights; test questions and answers for each chapter in the course book used in the course. 4th year Instructors position available at the Center of Applied Technology, 800 Stevenson Road, Severn, MD. Classes held Monday and Wednesday evenings 6 – 9 p.m. Qualifications: •
Master Plumber, Master Inspector or Journey Plumber License is essential.
•
Four years trade experience is acceptable, yet a minimum of six years is preferred.
•
Prior teaching experience preferred, but not required.
For additional information and/or applications contact the PHCC office (410) 461-5977 or visit us on line phccmd@ aol.com. Resumes may be faxed to (410) 750-2507 or via e-mail phccmd@aol.com.
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Maryland PHCC Contractor | Fall 2016
2016/2017 CALENDAR OF EVENTS Board of Directors’ Meeting 1st Tuesday of the Month General Membership Meeting 2nd Thursday of the Month 32 Hour Backflow Course Thos. Somerville Co. 1510 Tilco Drive Frederick, MD November 4, 5, 6, 2016 January 13,14, 15, 2017 8 Hour Backflow Re-Certification Course Thos. Somerville Co. 1510 Tilco Drive Frederick, MD November 5, 2016 January 14, 2017
32 Hour Backflow Certification Course Dundalk Community College 7200 Sollers Point Road Baltimore, MD October 21, 22, 23, 2016 November 18, 19, 20, 2016 January 27, 28, 29, 2017 8 Hour Backflow Re-Certification Course Dundalk Community College 7200 Sollers Point Road Baltimore, MD October 22, 2016 November 19, 2016 January 28, 2017 Gas Fitters Training Course and Plumbing Code Review Courses For schedule and application information call (410) 461-5977.
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Only if you have the Ion Solution can you really be fully protected. Call your Ion Solution Certified Installer today or find one online at www.ionproducts.net.
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Installing innov solutions has nev
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MPPII
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Our preassembled duplex alternating system that provides 45 GPM at 10' of TDH. This system comes with two primary pumps, Ion Genesis controller and sensors and necessary piping.
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Our preassembled duplex alternating system that provides 51 GPM at 10' of TDH. This system comes with two primary pumps, Ion Genesis controller and sensors and necessary piping.
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Entry level backup protection that uses a 12 volt DC pump that will run when there is a power outage. This system comes with a DC backup pump with standard switch, an 8 amp charger unit with audible alarms and battery box.
Maryland PHCC Contractor | Fall 2016
vative pumping ver been simpler
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Our most recognizable battery backup power source. Features include easy to read LCD screen for real time monitoring, alarm contact for remote monitoring and notification, solar & wind inputs for battery charging, improved charging circuit and high inrush capability.
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Our fully automatic auxiliary power source system that provides 51 GPM at 10' of TDH. This system comes with a ⅓ HP primary pump, Ion+ high water alarm/switch, power inverter with LED screen and battery box.
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Our fully automatic auxiliary power source system that provides 65 GPM at 10' of TDH. This system comes with a ½ HP primary pump, Ion+ high water alarm/switch, power inverter with LED screen and battery box.
Questions?
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[ 15 ]
Basement flood protection just got a lot easier
WC33i+
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Introducing the Ion+ pumps 1
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Install with confidence Our packages come complete with every part needed to ensure a quick and seamless installation.
Questions?
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[ 16 ]
Maryland PHCC Contractor | Fall 2016
HR Lessons From Real Life
Tactical Answers for Situations You May Face
Whatever the makeup of your company, your employees will present complex human resources issues. Here are a few examples of how to address them effectively. Prepared for the PHCC Educational Foundation by TPO, Inc. EXAMPLE #1 An employee announces she is pregnant and her intent to use all of her FMLA leave. You learn from a secondhand source that she plans to quit once the FMLA period ends, while collecting benefits in the meantime. What are the rules regarding handling this situation and hiring a replacement based on this information? You must tread carefully regarding all things FMLA. There are major restrictions on terminating and replacing an employee taking FMLA leave. Therefore, you must stick to the federally prescribed script, maintaining a respectful and fact-based response to the employee’s request for leave. Also, since the information is from a secondhand source, it would be advisable to investigate further before forming an opinion or taking any action. An option, if you were willing to make the following benefit concessions, would be to:
•
Tell the employee that if she decides not to return after her leave and lets you know, she will not be terminated immediately and will be able to continue her benefits; and
•
Tell her that if during her leave she decides not to return and gives you notice in writing, she can continue her employment and receive benefits through the end of leave.
That conversation would increase the chances that you’d be given notice and buy you more time to start to find, hire, and train a replacement. Keep in mind that if you offered those concessions to one employee, you’d have to offer them in all cases. In the end, whatever you choose to do, act cautiously and follow the FMLA rules, consulting with an HR professional or an attorney if necessary. EXAMPLE #2 A key employee comes to you and says he or she will be leaving the company unless you can give an immediate raise to match the offer received from another company. What do you do? First, have a conversation with your employee and try to find out what’s behind the employee’s desire to leave, because there often is more to the situation than money. The employee might require a simple accommodation, for example, a bit more flexibility in schedule so the employee can pick up his or her children by a specific time. If the employee’s salary is fair and competitive and you are able to address any underlying issues, the raise question might become moot. However, if the situation isn’t that simple, there are several considerations before you give the employee a counteroffer. You might want to give the employee a raise because he or she brings a lot of value to your company or has a highly specialized skill set that would be difficult Fall 2016 | Maryland PHCC Contractor
[ 17 ]
to replace. You might also be stretched thin and don’t think you can manage losing an employee at the moment. And finally, it takes a lot of time and investment to find, hire, and train a new employee. Those reasons are compelling, but they are focused on the short term. You should consider the following questions: IS THE EMPLOYEE REALLY DOING THIS FOR THE RAISE? If there’s an underlying reason the employee wants to leave the company, a raise will be a quick fix but won’t bring the employee satisfaction in the long term. Also, chances are that if the employee got a job offer, they have been look at other jobs for some time. If the employee’s concern had been simple and fixable, the employee probably would have asked for the accommodation. Therefore, the request may signal a deeper lack of satisfaction than salary concerns, and the employee is likely to leave later if you do spend the extra to try keeping them. WHAT’S THE COST-BENEFIT ANALYSIS? It takes time and money to find, hire, and train a replacement, but if the employee is dissatisfied underneath the request, chances are he or she will be gone in six to 12 months, and you still won’t have hired a replacement. What will happen if other employees find out? Other employees will probably find out about the raise, even if your conversation is private. First, you might take a hit to employee morale because other employees feel undervalued. Second, other employees might expect that similar demands will be met with a similar raise for them too. And if the employee in question ends up leaving anyway, you would still have your remaining employees’ expectations to manage. If you decide to let the employee walk, you can:
•
•
•
[ 18 ]
Congratulate the employee and say he or she will be missed.
This might be an opportunity for learning. You might be able to increase overall employee satisfaction from the feedback you receive from this employee. You can therefore invest in your top performers from the get-go and work to prevent this from happening again. EXAMPLE #3 In the spirit of team building, the company hosts a social event for employees. Alcohol will be served, but the company would like to limit the liability concerns and try to avoid having an employee drink too much and risk getting into a traffic accident on the way home. Of course you want to discourage employees from getting intoxicated, avoid providing alcohol to an already intoxicated employee, and avoid serving alcoholic beverages to a minor. But you should also consider the following factors that create or increase company liability and how you can mitigate them:
•
Alcoholic Beverages - There are a number of ways to reduce risk:
o It’s a good idea to offer food and non-alcoholic beverages as well;
o Consider offering other forms of entertainment; o Issue employees a set number of drink tickets (two, for example);
o Limit the bar offerings to beer and wine; o Hire a bartender for the event with the authority to cut employees off;
o Hold the event somewhere with a liquor license where such bartenders or waiters will serve the alcohol;
o Limit the time alcohol is available;
If the employee comes back saying, “I’d like to stay, but I need this raise,” you can reaffirm that you’re unable to give a raise without an appropriate increase in responsibilities or job duties to match. If they are qualified and willing to take on the extra work, then he or she will be eligible to receive more compensation.
o Provide easily available transportation, and keep a
If the employee decides to leave, ask about any recommendations for changes.
o Discourage employees from drinking heavily in
Maryland PHCC Contractor | Fall 2016
close eye on employees to make sure no one who might be impaired gets behind the wheel;
o Hold the event earlier in the day so it’s less socially acceptable to drink heavily;
a statement circulated before the event or in the employee handbook (referred to again before the event);
o Lead by example in consuming alcohol at the event; or
o Have employees pay for alcoholic beverages.
•
Non-Mandatory Event. Make clear that attendance at the event is optional.
•
Not For a Business Purpose. A clear definition of the event being a company hosted party makes it easy to define the employer the host and the employee the guest, and a host can be held liable in many states. To avoid establishing a business purpose for the event, avoid talking about business matters (this includes speeches about the company or the presentation of performance awards). Avoid assigning employees any specific functions at the event. And finally, hold the event outside regular business hours and/or away from your premises.
If you’re still worried about any of the situations above, especially those that concern the law, which can vary state by state, consult an HR professional or attorney. This content was developed for the PHCC Educational Foundation by TPO, Inc. (www.tpo-inc.com). Please consult your HR professional or attorney for further advice, as laws may differ in each state. Laws continue to evolve; the information presented is as of April 2016. Any omission or inclusion of incorrect data is unintentional. Please note this article is not intended to provide legal advice or to substitute for supervisor employment law training. The PHCC Educational Foundation, a partnership of contractors, manufacturers and wholesalers was founded in 1987 to serve the plumbing-heating-cooling industry by preparing contractors and their employees to meet the challenges of a constantly changing marketplace. If you found this article helpful, please consider supporting the Foundation by making a contribution at http://www.phccfoundation.org
Fall 2016 | Maryland PHCC Contractor
[ 19 ]
2016 FLSA Changes:
The New
OVERTIME RULES Prepared for the PHCC Educational Foundation by TPO, Inc.
T
he Fair Labor Standards Act (FLSA) is a federal regulation that establishes the federal minimum wage, overtime pay eligibility and rates, and recordkeeping requirements, among other things. It requires many employers to pay employees who fall under a specific salary threshold (non-exempt employees) overtime of 1-1/2 times their regular rate of pay when they work more than 40 hours in a workweek. Employees with salaries above that threshold and who meet the duties test of a specific job description in the executive, administrative, professional, computer, or outside sales employee categories are exempt from the overtime protection. The Department of Labor (DOL) recently made significant changes to the FLSA’s overtime rules that could affect your business. Here is what you need to know. THE OVERTIME CHANGES The DOL released its overtime changes May 18, 2016 and they will go into effect December 1st. The DOL’s final rule did the following: • Most significantly, the annual salary threshold will increase from $23,660 to $47,476 (or from $455 to $913 per week). If an employee earns less than that $47,476 threshold and works more than 40 hours in a workweek, the employee must be paid overtime. So employees who earn less than $47,476 need to be reclassified as nonexempt. If an employee’s current job description qualifies for exempt status based on the duties test, the company may choose to increase the employee’s salary to keep him or her exempt. For more information on job duties tests, please see the appendix to this article from our September 2015 e.bulletin. [ 20 ]
Maryland PHCC Contractor | Fall 2016
•
The DOL will automatically update the salary levels every three years. The next update will be January 1, 2020.
•
The annual threshold for highly compensated employees – who perform at least one of the duties or responsibilities of an administrative, executive, professional, computer, or outside sales employee – to be considered exempt without having to pass the duties test has increased from $100,000 to $134,004.
•
Employers can count non-discretionary bonuses and commissions that are paid at least quarterly toward 10 percent of the annual salary threshold. Employers can also make a catch-up payment at the end of the quarter to ensure employees meet the threshold.
There are no changes to the duties test used to determine whether administrative, executive, professional, computer, or outside sales employees earning more than the salary threshold may be classified as exempt from overtime protections. HOW TO PREPARE FOR THE CHANGES To prepare for the December 1 deadline, examine your employee classifications. First, make sure that all current employees, and any new hires between now and December 1st, classified as exempt meet both the duties test and the new salary requirement. If any employees classified as exempt don’t meet those requirements, they will have to be reclassified, or other action must be taken for you to remain in compliance. Finally, keep track of regulations in your state. States may enact wage and hour rules that differ from the federal overtime requirements. Follow whichever rules are more generous to employees. Once you’ve examined your business, you’ll have to make some decisions to both comply with the new rules and minimize their impact on your business. CONSIDERATION #1: Controlling Costs Through Salary and Classification Here are a few possibilities for how you can control costs to your business if some of your employees need to be reclassified. All these methods have their benefits and drawbacks so think about them carefully. Some may work better for your business based on your costs, but apart from that, they could affect employee satisfaction and turnover: • If employees would need to be reclassified from exempt to non-exempt under the new rules, you can bump up their salary so that they remain exempt. As long as they also meet the duties test to be exempt they won’t need to be paid overtime.
Can you afford to increase salaries (with the accompanying decrease in overtime hours)? If you decide to increase salaries, you will need to check each time the threshold adjusts to make sure the salaries are still above it. • Decrease employees’ hourly rates so that when they’re paid overtime, they’re paid the same amount as previously. If you reduce hourly rates, employees won’t be happy about a drop in their regular wages, even with an explanation of the overtime offset. Also, will it be difficult for you to ensure that the overtime fully compensates for the loss in regular pay? • Reclassify employees as non-exempt but restrict hours to avoid overtime. If you choose to restrict overtime, is it feasible for you to track and carry on your business? • Hire part-time workers to offset the restricted overtime. How will the workers who lose their overtime pay react when part-time help is added? What are the training and other costs associated with adding new employees? Is it worth the tradeoff? • Reduce fringe benefits. And finally, employees might not be pleased with the loss of fringe benefits. But could you compensate for that loss by offering options with lower costs but that might appeal to employees, such as flexible scheduling? Once again, it’s important to discover what works for your business and to start implementing now so that you’re not caught off guard when the rules go into effect in December. CONSIDERATION #2: Tracking Time If you have more employees classified as non-exempt and therefore need to keep close track of their hours, you’ll have to ensure your timekeeping procedures and systems are up to the task. Here are a few ideas to keep in mind:
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Train or re-train employees who will become non-exempt to use your company’s timekeeping methods so that they get used to being aware of their hours and their 40-hour limit.
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Use a computerized timekeeping system that keeps track of the actual beginning and end of each work period, including unpaid breaks. There are mobile applications available that don’t require expensive hardware. Fall 2016 | Maryland PHCC Contractor
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If you use periodic time sheets, train employees to record their time each day rather than at the end of the pay period so that their hours are accurately recorded. Also, emphasize that this includes hours worked outside official start and end times, such as time at meals or outside the workplace. Have employees sign off on their hours to help prevent off-the-clock work claims. Make sure to clearly communicate your timekeeping policies and procedures to employees. Regularly check to make sure employees’ hours are accurate.
Restricting employees to their 40 hours might also require a cultural change in your business. Employees might be used to working until the job gets done. Emphasize that working 40 hours might not mean a strict 9-to-5 schedule; rather, employees might work more one day and less the next based on need. Establish that overtime must be approved in advance by a manager. CONSIDERATION #3: Employee Morale It’s also important to start thinking through the changes you’ll make to accommodate the new rules so you can start communicating with your employees about any changes as soon as possible. Consider the effect on all your employees of any salary decisions. For example, if you decide to raise some employees’ salaries, what will other employees think? You don’t want to significantly alter internal pay equity. [ 22 ]
Maryland PHCC Contractor | Fall 2016
Employees who are moved from the exempt to the nonexempt classification will most likely be hurt because – whether fair or not – employees tend to think of losing the exempt classification as a loss in status. Tell these employees that the change is based on objective standards and government rules and that it doesn’t represent loss of responsibility or prestige. You could also mitigate any dissatisfaction by pointing out that employees will be paid for any overtime work. Also keep in mind that the DOL rule doesn’t require affected employees to become hourly workers; they can remain salaried employees but must be paid overtime. If you decide not to change that classification in following the new rules, consider whether that would increase your costs, complicate recordkeeping, or in any way prevent you from complying with the FLSA. As mentioned above, employees who are suddenly required to track their hours will face a culture shock and need to get used to recording their time as soon as possible. You must not only soften the blow of this change, but also make clear to employees that only specific types of work are allowed outside normal work hours; how much time can be spent working outside normal hours; and the necessity of tracking time. CONCLUSION With such a sea change in employment law, you must consider what’s best for your business and employees, and communicate that from the very beginning. As with any such change, you can consult the DOL website with any further questions and concerns about the FLSA changes, and an HR professional or employment attorney can offer further advice.
Where to buy Taco in Maryland
To find your nearest Maryland supply house for Taco Comfort Products, call the main numbers listed below or visit the suppliers’ websites. R.E. Michel 410-685-8371 / www.remichel.com Thomas Somerville 310-390-9575 / www.tsomerville.com Northeastern Supply 410-574-0010 / www.northeastern.com Ferguson 410-540-2800 / www.ferguson.com McArdle & Walsh 410-252-8700 / www.mcardlewalsh.com Southern Utilities 301-589-2885 / www.southernutilitiesco.com Winsupply (to include Noland locations) 301-386-7771 / winsupplyinc.com Schumacher & Siler 410-561-2461 / www.schumacherseiler.com
Taco Comfort Solutions products are proudly represented in Maryland by N.H. Yates & Co. of Cockeysville.
www.TacoComfort.com
III
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Maryland PHCC Contractor | Fall 2016
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