July 2016
PLUS: 22nd Annual AASP-MN Golf Outing Highlights www.grecopublishing.com
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AASP-MN News
CONTENTS AASP-MN News is the official publication of the Alliance of Automotive Service Providers, Minnesota, Inc. 1970 Oakcrest Ave., Suite 102 • Roseville, MN 55113 Phone: 612-623-1110 • Fax: 612-623-1122 email: aasp@aaspmn.org • website: aaspmn.org. To keep its readers better informed, AASP-MN News allows its columnists to fully express their opinions. All views expressed are not necessarily those of the publication. AASP-MN News is published by Thomas Greco Publishing, Inc. © 2016 All rights reserved. Cover image © www.istockphoto.com.
AASP of Minnesota is an association of independently-owned automotive service businesses and industry suppliers dedicated to improving the state’s automotive service industry and the success of its members.
AASP-MN BOARD MEMBERS
Vol. 24 No. 7
ASSOCIATE DIVISION DIRECTOR’S MESSAGE .................................................6 Commitment is a 3-Letter Word: YOU! by Dave Bock, AASP-MN Associate Division Director LEGISLATIVE UPDATE .............................................................................7 Business Tax Break on Hold Following Pocket Veto by Kevin Walli, AASP-MN Lobbyist
2016 - 2017 PRESIDENT Greg Kasel, AAM IMMEDIATE PAST PRESIDENT Tom Gleason SECRETARY-TREASURER Wayne Watson COLLISION DIVISION DIRECTOR Will Latuff
LOCAL NEWS .......................................................................................8 NATIONAL NEWS ..................................................................................12 DEG ESTIMATING TIPS ..........................................................................15 COMPLETE HEALTH, ENVIRONMENTAL & SAFETY SERVICES (C.H.E.S.S.) ..............16 Oil and Water and Shoes Don’t Mix by Janet L. Keyes, MS, CIH and Carol A. Keyes, MA, CSP
MECHANICAL DIVISION DIRECTOR Mars Overlee
INSURANCE I.Q. ..................................................................................20 Implementing the New Overtime Regulations: 5 Steps to Predicting and Controlling Costs
ASSOCIATE DIVISION DIRECTOR Dave Bock
CASH IN ON YOUR MEMBERSHIP!..............................................................22 AmeriPride Linen & Uniform Services: The Partner You Need to Do Your Image Proud!
COLLISION SEATS Jim Siegfried, AAM Bruce Tschida, AAM MECHANICAL SEAT Carl Thomas
STAFF EXECUTIVE DIRECTOR Judell Anderson, CAE, AAM OFFICE ADMINISTRATOR Jodi Pillsbury MEMBERSHIP COORDINATOR Tom Kluver PUBLISHED BY: Thomas Greco Publishing, Inc. 244 Chestnut St., Suite 202 Nutley, NJ 07110 PHONE: 973-667-6922 • FAX: 973-235-1963 PUBLISHER Thomas Greco (thomas@grecopublishing.com) SALES DIRECTOR Alicia Figurelli (alicia@grecopublishing.com) EDITORIAL DIRECTOR Joel Gausten (tgpjoel@verizon.net) EDITORIAL ASSISTANT Chloe Durante (chloe@grecopublishing.com) CREATIVE DIRECTOR Lea Velocci (lea@grecopublishing.com) OFFICE MANAGER Donna Greco (donna@grecopublishing.com) www.grecopublishing.com
UPCOMING EVENTS
August 24, 2016 A Night Out with the Saints CHS Field St. Paul For more information, contact the AASP-MN office at 612-623-1110 or visit the Association’s website, www.aaspmn.org. ADVERTISERS’ INDEX AmeriPride........................................................7 aaa Auto Parts ..................................................21 Axalta Coating Systems ....................................OBC Blue Net, Inc. ..................................................17 Buerkle Hyundai................................................17 CBIZ..................................................................IFC C.H.E.S.S. ........................................................16 Choice Auto Rentals..........................................13 Dentsmart ........................................................20 FinishMaster ....................................................19 Inver Grove Honda / Inver Grove Toyota............18 Jack McClard....................................................18 Keystone ..........................................................4 Libson Twin City ..............................................19
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Maplewood Toyota............................................4 Meadowbrook Insurance ..................................IFC Mills Parts Center ............................................6 Morrie’s ............................................................9 Motorwerks BMW ............................................IBC MPA..................................................................11 PAM’s Auto ......................................................13 Proven Force ....................................................14 Rosedale Chevrolet ..........................................10 Roseville Chrysler ............................................6 Straight & Square ............................................14 Toyota Group ....................................................3 West Bend Insurance ........................................IFC
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ASSOCIATE DIVISION DIRECTOR’S MESSAGE
Commitment is a 3-letter word:
YOU by Dave Bock AASP-MN Associate Division Director
When members of the Associate Advisory Committee suggested that I take on the role of Associate Division Director, I was somewhat hesitant because I didn’t know what type of time commitment was required. My position with Automotive Parts Headquarters/Auto Value requires a fair amount of travel, which I knew would present some conflicts with the meetings and membership activities. But watching my predecessor (Kevin Martin) professionally handle his directorship over the past three years made it an easy decision to accept this opportunity to serve the AASP-MN membership. During the Board of Directors’ Orientation on April 26, I quickly found out why AASP-MN continues to be a
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nationally-respected association: Commitment. You couldn’t have found a more committed person than Dale Feste (past president and honorary member of AASPMN) to start the meeting and remind the incoming board members about the importance of our roles in supporting the AASPMN membership, as well as our automotive industry. (Also, to not be late for meetings!) As a “newbie” on the Board of Directors, I was impressed with the amount of strategic planning and decision-making that happens behind the scenes. I also realized that I’ve got a lot to learn, and that I’m lucky to be surrounded by a very experienced and dedicated group of directors and AASP-MN staff members…Judell,
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Jodi and Tom. If you are reading this article, please pat “you” on the back for making the commitment to be involved with AASP-MN in 2016. It all starts with your membership in the AASP-MN family, then evolves into increased participation in association programs and training events. And if you are fortunate (like me), you’ll be asked to sit on one of the AASP-MN committees and learn from the best in our industry. I look forward to working with you in the future!
LEGISLATIVE UPDATE
Business Tax Break on Hold Following Pocket Veto A centerpiece tax provision exempting the first $100,000 of a business’s property value from the state property tax is on hold following Governor Dayton’s refusal to sign the Omnibus Tax Bill by midnight, June 6. The Governor’s refusal to sign a bill within a constitutionally-determined timeframe is referred to as a “pocket veto.” The Governor cited a typo in the Tax Bill that would have reduced state revenue for a stadium fund by $100 million. Over $270 million of ongoing annual tax relief was provided for in the bill, which the Governor has said he will sign when the typo is corrected and the bill repasses in a Special Session. He would have to call a Special Session this summer.
While there is little controversy on the balance of the Tax Bill, lining things up for a Special Session is not necessarily going to be simple. The Legislature failed to pass either a transportation package or a bonding (public infrastructure) bill as the 2016 Session came to a close. The Governor and House Republicans have a number of issues to resolve before a Special Session can be called. The version of the Bonding Bill that was being considered at the close of the Regular Session did not include several projects which the Governor had proposed and which he regarded as high priorities. One major stumbling block is the Governor’s insistence on providing a source of funding to match federal dollars for the
by Kevin Walli, AASP-MN Lobbyist
Southwest Metro Light Rail Line. There are many interest groups with much at stake in the Tax and Bonding Bills. The Governor and legislative leaders continue their negotiations to find compromise – and a bit of good news on the business tax front is that all parties agree on the $100,000 property value exclusion from the state property tax. Now, we need to wait and see whether common ground can be found on the bonding and transportation fronts. Special Sessions once were the exception rather than the rule. Now we are seeing Legislative Session meltdowns as the normal course of business. Here’s hoping we can get this one resolved quickly.
Welcome New Members:
JUNE 2016 Doug’s Auto Service Northfield Frazee Auto Body & Glass Frazee HyTech Automotive Princeton & Milaca Key Automotive Hugo The Auto Body Shop Willmar AASP-MN News
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LOCAL NEWS
CARCAREERS.ORG MAKES ITS DEBUT Statewide Campaign Encourages Students to Pursue Careers in Automotive Industry Employers in the automotive industry know that the pipeline of qualified employees has been shrinking in recent years. That’s why AASP-MN spearheaded the creation of Minnesota Careers in Automotive Repair and Service (MNCARS), an industry-wide campaign with the goal of ensuring a future workforce for the state’s automotive service and collision repair industry. With hundreds of jobs waiting for qualified candidates, the time is now to attract new professionals to this exciting and rewarding field. In June, MNCARS kicked off its campaign with the launch of www.car careers.org, an informative website that will serve as a central resource for students, parents, teachers and counselors to learn about the latest automotive career information and education programs. The website includes sections on: the benefits of pursuing an automotive career, correcting common misperceptions about the industry, the wide variety of career paths available and a listing of all post-secondary automotive programs in the state. The site also demonstrates the bright future of automotive careers by spotlighting real-life stories of local automotive professionals. An information kit for school counselors is under development and will be available in the near future. Over the course of the two-year campaign, the MNCARS effort will meet students, parents and educators where they are through participation in community events and social media. The website will be supported by Facebook and Instagram channels that will feature stories, news and photos to inform, educate and motivate students to find out more about career opportunities in the automotive industry. AASP-MN members and the entire automotive community are invited to join in the fun and contribute their own content and views at Facebook.com/carcareers. MNCARS also had a presence at Back to the Fifties at the State Fairgrounds on June 17-19, thanks to the generosity of PPG, Suburban Chevrolet and Keystone Automotive. Displays and handouts promoting the carcareers.org website, as well as a photo contest on Facebook, were designed to get car enthusiasts to start thinking about cars as more than just a hobby and to open their eyes to the outstanding career opportunities that exist in the industry. The work of MNCARS is made possible by the generous contributions of industry organizations and companies. Check out www.carcareers.org and visit the About Us page to see a list of sponsors and supporters. Stay tuned for further updates about the progress of this important initiative. 8 July 2016
NEGOTIATION TOOLS & BEST PRACTICES SEMINAR HIGHLIGHTS In partnership with Axalta, AASP-MN hosted Mike Anderson of Collision Advice to present “Negotiation Tools & Best Practices” on June 2 at the Radisson Hotel in Roseville, MN. Sixty-five students attended the popular instructor’s class, which focused on the negotiation process between insurers and collision repair facilities. Anderson provided real-world examples to give students proven methods to get paid what they are owed.
In addition, Anderson presented results from his “Who Pays for What?” surveys, which gave students more knowledge about what insurers will and will not pay for and how to use the survey results to negotiate and justify an estimate. One attendee said, “Any class Mike does in Minnesota, I want to be at. I learn more and more each time I see him.”
EAGAN’S FIRST FIRE TRUCK GETS ANOTHER LEASE ON LIFE THANKS TO TWO AASP-MN MEMBERS AASP-MN members Dan Sjolseth, Superior Service Center, Eagan, and Scott McClure, St. Paul Automotive, St. Paul, recently donated their time and expertise to restore Eagan Fire Department’s 1942 Chevrolet pumper. The pumper - nicknamed “Jenny”- was decommissioned in 1980, but has made appearances at parades and other community events since then. Last summer, the gears on her original transmission finally went out. After hearing the beloved “Jenny” might be grounded for good, Sjolseth, who refurbished the truck back in 2010, jumped back into action again, eventually recruiting McClure. According to the St. Paul Pioneer Press, the two “donated their time—about $15,000 worth—to fabricate the truck
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and install the motor, exhaust and a new automatic transmission. The fire department paid about $5,000 in new parts.” “For these guys to reach out and do this for Eagan is pretty cool,” Fire Chief Mike Scott said. “You don’t see that much anymore.” continued on pg. 10
THANK YOU TO OUR SPONSORS!
Gold Sponsors Auto Value Parts Stores/APH Autoshop Solutions Axalta Coating Systems CBIZ AiA Meadowbrook Insurance PPG Automotive Finishes United Fire Group Silver Sponsors aaa Auto Parts Dent Impressions Enterprise Rent-A-Car LKQ/Keystone Automotive Lowell's Performance Coatings & Equipment Midwest Parts Advantage Mitchell International O'Reilly Auto Parts PAM's Auto, Inc. R.O. Writer Suburban Chevrolet Other Sponsors 3M AASP National Bill Smith Fund Choice Auto Rental Dentsmart Paintless Dent Removal FinishMaster Global Finishing Solutions Hertz Corporation Insurance Brokers of MN / Jensen Agency Kukui Corporation Net Driven Sherwin Willams Single Source, Inc. Valspar AASP-MN News
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LOCAL NEWS 22ND ANNUAL AASP-MN GOLF OUTING HIGHLIGHTS On Tuesday, June 21, 112 golfers and 25 sponsoring companies enjoyed a beautiful day golfing and socializing at the 22nd Annual AASP-MN Golf Outing at Keller Golf Course, Maplewood. As always, the competition was fierce, but the team from LaMettry’s Collision was declared the winner with a score of 57 (15 under par). Team members were: Justin LaMettry Mike Ballou Eric Johnson John Rutz The team from aaa Auto Parts placed second, represented by team members Todd Ratzlaff, Patrick McKinney and Pete Anderson of aaa Auto Parts and Aaron Wheatcraft of Arcon Solutions. Third place winners were Dan Swenson and Wes Harris of Alexander’s Import Auto Repair, Terry Johnson of Sears Imports and Joe Nelson of Morrie’s. CBIZ AiA raised $1,055 for AASPMN’s Education Fund during its “Beat the Agent” contest on hole #4. The AASP-MN Education Fund provides scholarships to students in NATEF-certified automotive
continued from pg. 9
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programs. In addition, a fundraiser to support a new industry initiative, Minnesota Careers in Auto Repair and Service (MNCARS), raised $665. MNCARS is a two-year outreach and marketing campaign designed to
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recruit people into college auto service and collision repair programs, and ultimately into careers within the industry.
NATIONAL NEWS
FCA TO BODY SHOPS, INSURERS: SCAN EVERY VEHICLE BEFORE AND AFTER ANY REPAIR In June, Fiat Chrysler Automobiles (FCA) confirmed that auto body shops, glass replacers and even someone disconnecting a battery must scan a vehicle before and after every repair. A Mopar position statement sent to I-CAR, collision repair associations and more than a dozen major auto insurers and subsidiaries set out the official OEM stance on the procedure:
Safety and security related systems, such as antilock brakes, supplemental restraint systems (SRS – air bags), occupant restraint controller (ORC), seat belts, active head restraints, forward facing camera and radar, blind spot monitoring, and other automated electronic driver assistance systems, MUST be tested for fault codes (DTCs) that could be active (current) or stored following a collision. Use of the Mopar wiTECH vehicle diagnostic tester is necessary before and after collision repair.
ANY of the following conditions could trigger DTCs prior to or during collision repairs, which could result in improper vehicle performance: • Vehicle is involved in an accident or collision, even though the damage may appear minor • Vehicle has been in an accident with or without air bag deployment • Voltage loss, including battery disconnects and hybrid battery disabling • Significant vehicle disassembly including, but not limited to, bumpers, door handles, headlamps and mirrors • Interior trim repair or removal • Glass removal and replacement operations
The OEM also notes that aftermarket scan tools might not cut it. “Use of the Mopar® wiTECH vehicle diagnostic tester (Mopar Scan Tool) is an important part of FCA U.S. vehicle service and maintenance,” the document states. “This tool contains software that aftermarket tools may not contain and can assess whether any FCA U.S. vehicle’s safety and security systems contain active or stored Diagnostic Trouble Codes (DTCs).” The full document can be found at http://tinyurl.com/gpe4mqo. The OEM didn’t specify which model years would require the procedures. However, it’s interesting to note that safety devices mentioned in the statement include not just cutting-edge and soon standard, in the case of autobraking - features like automated electronic driver assistance systems and blind spot monitoring. They also include mundane safety items like antilock brakes and seatbelts. Collision repairers have complained that insurers refuse to reimburse for the procedure, which experts say is as necessary as 3-D measuring on basically every vehicle - the dash light doesn’t tell you nearly enough. Insurers emailed the document included Allstate, Amica, Erie, Esurance, Farmers, GEICO, Kemper, Liberty Mutual, 12 July 2016
Metlife, Nationwide, Progressive, Safeco, Shelter, State Farm, Travelers and USAA. Courtesy of Repairer Driven News
SERVICE BAY SHARE BOOGIE Big changes in service bay share are underway among major types of light vehicle repair outlets. Over 35,000 service bays were shuttered in the U.S. during the past 10 years (2005 to 2015) despite the car and light truck population surging by more than 15 million. Although approximately three percent of service bays closed between 2005 and 2015, bay loss was concentrated among just a few major types of service outlets. In fact, several major outlet groups expanded their bay count. This has significant consequences for where light vehicles are serviced in the U.S., as well as the strength of major distribution channels supplying the car and light truck aftermarket. Six Major Takeaways • Although total VIO (vehicles in operation) increased by more than 15 million between 2005 and 2015, the light vehicle service bay population across the U.S. fell more than 35,000. • Service stations and garages increased their bay share over the past 10 years, climbing from 29 percent to 30 percent of total car and light truck service bays. Repair specialists also expanded their bay share, expanding from 16 percent to 19 percent of all service bays nationwide. • Foreign specialists recorded the largest relative increase in service bay share over this 10-year span, increasing from less than six percent to over seven percent of the light vehicle bay population. • Tire stores recorded a moderate increase in bay share, representing 11 percent of the service bay population at mid-year 2015, up from 10 percent share 10 years earlier. • Vehicle dealer bay share fell from 29 percent to 25 percent between 2010 and 2015, while the residual category of All Other Outlets sank from 12 percent to 10 percent in bay share. • Independent (non-dealer) service bays increased from 71 percent to 75 percent of all car and light truck service bays across the U.S. during this 10-year span. This had a significant impact on the strength of major types of repair outlets and the product shares of individual distribution channels supplying the light vehicle aftermarket.
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Courtesy of the Lang Aftermarket iReport
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ESTIMATING TIPS
Transparent Colors in Audatex Some colors may require additional coats of base material or tinting of the primer sealer because they are more transparent than other colors. These additional steps would not be included in the Audatex refinish time and would require a manual line. This can be found in the Audatex DBRM on page 161: “Some colors have been identified by the paint makers as very transparent. These colors may require tinting the primer/sealer or additional coats of base materials to achieve a correct match (hiding). If this is necessary to achieve a visual color match (hiding), any application of base color beyond the third base coat may require an adjustment of the refinish labor and material allowance.”
Option selection in CCC One It’s important to have the correct options selected in the vehicle options’ tab on your estimating system. For example, when the fog lamps are selected in the Vehicle Options tab, the front bumper cover w/o fog lamps will not display. To see the front bumper cover w/o fog lamps part, please de-select the fog lamp option. This can be found in DEG inquiry 9272.
Wheel Balance is not included with wheel replacement in CCC One Balancing of the wheel is a not-included operation when replacing a wheel in CCC One. This can be found in the footnotes of CCC and also in DEG inquiry 5404. Clear Coat Panels in Audatex To make sure you receive clear coat for inner panels in Audatex, you must have Two-Stage listed under the vehicle section of the estimate. This section is just above the vehicle options section. Example 1 below shows Two-Stage next to Int. Refinish so this estimate will calculate clear coat for inner panels.
Test Fit Part Test fit parts is a not-included operation in all three estimating systems.
Audatex states in DEG Inquiry 2491: We have reviewed your inquiry and in the Reference Manual section 4-3, Replacement & Recycled Operations, there is a statement under Included Operations (Front End Cover/ Panel),... Reasonable adjustment and alignment [as defined by the manufacturer using conventional fasteners and/or hardware]. Our labor includes time for normal adjustment and alignment for fit, one time. If a part needs to be removed multiple times to duplicate these efforts, that is not included in our labor times.
Example 2 below does NOT show Two-Stage next to Int. Refinish so this estimate would not calculate clear coat for inner panels. This is very important to review with all estimates but most important when the estimate user has the option selected to NOT show the refinish breakdown under the refinish line.
CCC shows in Inquiry 9360: * Test fitting of a panel in order to determine alignment/straightening of the adjacent panel(s) and or flange(s) is not included with the Outer Panel labor allowance.
Mitchell also states in DEG Inquiry 6689: If a technician determines that a trial fit is required to check for proper and correct fit to vehicle, this would not be included in R&I/R&R of a component.
Note: The estimating databases are all intended to be used as a GUIDE ONLY - it is important to remember that the auto body professional performing the repair is in a position to thoroughly inspect, diagnose and identify the methodology and their unique cost of the vehicle damage repair. You can view these tips and others on the DEG website,
WWW.DEGWEB.ORG. AASP-MN News
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COMPLETE HEALTH, ENVIRONMENTAL & SAFETY SERVICES (C.H.E.S.S.)
By Janet L. Keyes, MS, CIH and Carol A. Keyes, MA, CSP
Oil and Water and Shoes Don’t Mix A body shop just received a grant from OSHA to redo the floor in its detail area. Why? Because an employee slipped on the soapy wet floor, breaking his wrist badly enough to require surgery. He wasn’t doing anything unusual. His injury isn’t unusual. But it was costly. And it is preventable. Why did he slip? If we want to be technical about it, the coefficient of friction between his footwear and the walking surface was clearly too low. Combine that with gravity’s insistence on exerting itself. Add in a likely attempt to catch himself, preventing head damage by thrusting out his arm so it took the force of his fall. Result: pain for him, more work for his coworkers, who had to cover for him, and more costs and stress for his employer. Prevention costs more upfront, but is a lot cheaper in the end. If you wash cars, soap will get on the floor. If you repair cars in Minnesota winters, snow and ice will be on your floors in
winter. We can’t eliminate those. But there are still lots of measures to take to reduce the likelihood of slips. Clean up spills and puddles. • Put water-catching mats in your entryway. • Have a zero-tolerance policy for fluid on the floor. Make it the responsibility of all employees to clean up any fluid, whether it’s from a car shedding snow, a leaking oil pan or someone’s clumsiness with coffee. • Invest in good squeegees and in good sorbents. Get away from using floor dry or cat litter for cleanup – those can be scattered around, don’t have that high of a capacity for fluids, and can be difficult to dispose of correctly. Instead, look at sorbent pads that can be wrung out and reused. And don’t just put them down and leave them – use them to clean up.
Prevent the slip • Install floor coatings with grit added, designed specifically for wet surfaces. • If you have the opportunity to redo floors in wet areas, such as wash bays, look at the water flow. Make sure it flows to your drain. • Discourage the use of slippery shoes. You’re not required to purchase footwear for employees, unless you require safety-toed footwear (which would be a good idea, by the way. But for that, you only need to provide a reasonable allowance, not the full cost). But you can request employees wear sturdy footwear with good tread.
Prevent the trip • Insist that employees hang up hoses and cords. • When you walk through your shop, look for tripping hazards. Is carpet in your office area coming up? Is a mat edge curled over? Are filing cabinet drawers left open? Are car parts left where they came off the car? Is cardboard left on the floor? If you have cords that have to be on the floor, such as many frame rack cords, cover those with a cord bridge. • Check your floor and your drains. Is the concrete spalling? Are there holes? Pipes sticking up? Edges of the drain that are uneven?
Look outside • Parking lots and sidewalks take a beating in Minnesota – just as roads do. If the asphalt is pot-holed or if the concrete slab has lifted up, you risk injury to employees and to customers. While you can require your employees to wear sensible shoes and to watch where they walk, you can’t require the same of your customers. So keeping your lot and sidewalk in good shape is essential. • Go outside during a rainfall. Where does the rain go? If you have water running across sidewalks or where people normally walk, you create a slipping hazard – particularly in winter, when that water freezes. Divert continued on pg.19
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C.H.E.S.S. continued from pg.16 it. Have a plan, such as using a salt spreader, for handling the icy spots you couldn’t prevent in winter. • OSHA’s $afetyPays calculator estimates direct costs of nearly $50,000 for one fracture (that doesn’t include the lost productivity, or your time in dealing with the injury, or the cost of customers displeased at the delayed delivery of their cars…). What’s your profit margin? How many more sales do you need to make up for that wasted $50,000? OSHA estimates more than a million, at a margin of three percent. That makes the time and effort required to prevent slips and falls seem like a pretty good bargain.
If you have questions about building safety, hazard prevention, handling worker injuries, OSHA grants or general safety issues, call CHESS at 651-481-9787 or e-mail us at CHESS@chess-safety.com. This article is intended to provide general information (no advice) about current safety topics. To discuss your specific concerns and how CHESS may help, please contact CHESS at 651-481-9787 or chess@chess-safety.com.
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INSURANCE I.Q.
Implementing the New Overtime Regulations: 5 Steps to Predicting and Controlling Costs
All employers should prepare now for the recent changes to the Fair Labor Standards Act (FLSA). New overtime regulations were unveiled by the U.S. Department of Labor (DOL) dramatically impacting which employees can be classified as exempt or nonexempt, and therefore due overtime for any hours worked more than 40 in a work week. Employers must comply with the changes by December 1, 2016. Key changes to the Fair Labor Standards Act (FLSA) include: • The minimum salary test for an employee to be exempt from overtime will become $47,476. • The level will increase every three years going forward. • Employers will be able to include non-discretionary bonuses to satisfy up to 10 percent of the new salary threshold. • The rarely-used “highly compensated employee” exemption will now require pay of $134,004, and will also increase every three years.
What is Still the Same? While the consequences of the changes are quite dramatic, much of the existing regulation remains intact. Specifically, employees above the $47,476 threshold must still pass one of the duties tests (i.e. executive, administrative, professional, etc.)
What Do I Do? 5 Steps to Predicting and Controlling Costs Companies are seeking to control the costs of implementing the revised regulations in a manner that is consistent with their culture. Employers have numerous options and scenarios on how to comply, each with different costs, pros/cons, employee morale and cultural implications that must be understood and weighed. To this end, the
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following approach can be used to optimize implementation:
1. Identify Affected Employees. Employees previously considered exempt that now fall below the new salary threshold must be identified. This can be easily accomplished through collecting and analyzing the current job and classification documentation, actual employee compensation (salary, non-discretionary bonus, incentive pay and commissions) and current FLSA status. The only real decision point in this step is whether to evaluate based on employee or by entire jobs (in other words, should exempt employees who are above the $47,476 threshold but are in a job with employees below the threshold be included).
2. Analyze Alternatives. Too many employers are simply deciding on one of the DOL’s simplistic implementation scenarios and then calculating the associated costs. However, best practices indicate that employers should evaluate all of their options before choosing the best path. Analyses that could be undertaken include:
• Zero-cost implementation strategy: Consider developing an hourly rate for affected employees by dividing their salary by the number of hours currently worked or expected of the position on an annual basis (i.e. perhaps 45 hours a week rather than 40). Increase all employees to the new minimum: Analyze the cost of bringing all affected employees to the new salary test minimum in order to maintain their exemption status. • What-if analysis: Conduct analyses to determine the cost of bringing some affected employees to the new minimum while changing others to hourly (perhaps drawing a line at varying levels of pay below the threshold).
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• Job modeling: Generally, it is recommended that all employees in the same title have the same exemption status. Model the cost of changing all employees in a title with one incumbent below the threshold to nonexempt. • Compression Analysis: Artificially increasing pay for some employees to the $47,476 threshold will almost certainly create compression with the pay of other employees in the same job or other jobs. It is important to identify and address areas of compression before finalizing an implementation plan. • Productivity loss: Consider productivity implications. If formerly-exempt employees who fall below the salary threshold are moved to the nonexempt status but capped at 40-hours per week to avoid overtime pay, what is the total value of lost productivity or amount that would have to be paid to hire new employees to replace the loss in productivity? How does this compare to the cost of allowing the affected employees to work overtime? • Long-term projections: The DOL’s methodology for updating the minimum salary threshold may result in nearly exponential growth. Accordingly, an analysis of the organizational impact over the next three, six, nine and 12 years is often an eye-opening exercise. It is recommended that a long-term analysis be conducted using both the best and worst-case scenarios. Specifically, the DOL’s update projections are exceptionally conservative and represent the minimum possible impact to employers. The worst case scenario (and, more likely) is that the minimum salary threshold will grow exponentially resulting in an annual average of 13.3 percent of exempt employees automatically becoming nonexempt.
needs with affordability?
5. Communicate Change. Finally, it is important to provide affected employees with individualized communication explaining how the revised regulation will affect their exemption status and pay, as well as procedures and policies for tracking time.
It is time to begin taking steps to ensure compliance by December 1, 2016. A provider experienced with compensation and human resources consulting may be able to help
INSURANCE I.Q.
your company identify how to meet the new requirements with minimal cost. For more information about FLSA compliance, please contact Dennis Spindler at 763-549-2238. Reprinted with permission of CBIZ, Inc. Copyright © 2016, CBIZ, Inc. All rights reserved. CBIZ is not rendering legal, accounting or other professional advice. Readers are advised to contact a tax professional prior to taking any action based upon this information.
3. Determine Current Misclassifications. Many organizations have some employees misclassified as exempt from the FLSA. Because the changing overtime regulations are in the news, perhaps now is the time to clean up any misclassifications without drawing attention to past noncompliance.
4. Develop Strategies. Based upon the analyses conducted above, it is time to make a decision. Which implementation strategy, or combination of implementation strategies, best balances your organization’s cultural
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CASH IN ON YOUR MEMBERSHIP!
The Partner You Need to Do Your Image Proud
In your industry, trust rules. You work hard to earn it from customers every day. When your business features branded work wear and floor mats, clean restrooms and bays, customers trust that you’re doing things right. This helps you stand out from the shops down the street and keeps customers coming back. AmeriPride Services offers a towel, rug and uniform rental program to AASP-MN members that features discounted prices, annual rebates, free installation, free emblems, no deposits and no set-up charges. With a uniform and facility care product program from AmeriPride, you’ll save: • Time – We’ll manage the details so you don’t have to. A Customer Portal with online billing and payment adds convenience and ease. • Space – Stocking the exact quantities your business needs. • Money – Weekly inventory monitoring means you’ll only spend on what you need.
Local support keeps your program running smoothly. We know that service is more than just doing the job. Excellent service is the result of going above and beyond. That’s why you’ll see the same familiar face at every delivery. We know service is more than a 1-800 number. Service is showing up—every day, no matter what.
Diamond Plate Shop Shirt & Performance Shop Pants and Shorts, Manufactured by Red Kap – Available through AmeriPride The Diamond Plate Shop Shirt is one of the newest additions to the AmeriPride family of Shop Gear products built specifically for car guys. Garage-tested for durability and comfort and inspired by car culture, it’s loaded with features designed to make doing your job easier and help you look good while doing it. It’s a shirt that’ll work as hard as you do – day after day, car after car. AmeriPride’s performance shop pants and shorts are unique in the industry. They come standard with features to make your job a little easier—like a cargo pocket on the left leg and doublepockets on the right leg for easy access to phone, keys and tools and a concealed waistband button to prevent accidental scratching of paint jobs. For more information, visit www.ameripride.com or call: Minneapolis 612-331-1600 Bemidji 218-751-5150 Mankato 507-345-1039
Hibbing 218-263-3611 St. Cloud 320-251-2525 Fargo 701-232-7484
AASP-MN MEMBER BENEFIT PROGRAMS WORKERS’ COMP INSURANCE Meadowbrook Insurance Group Contact: Dennis Spindler 763-549-2238 / dspindler@cbizaia.com Up-front scheduled credit makes Meadowbrook one of the most competitive programs around for Worker‘s Compensation insurance. In addition, members are eligible to receive an annual dividend based on the group’s loss ratio. For more information, log on to www.wcpolicy.com/aaspmn. PROPERTY/LIABILITY INSURANCE CBIZ AIA Contact: Dennis Spindler 763-549-2238 / dspindler@cbizaia.com CBIZ AIA will present AASP-MN members with quotes from multiple carriers for property/liability insurance and members can choose the program that best fits their situation. As an added bonus, CBIZ AIA will offer members an exclusive 10% discount on their property/liability insurance premiums. Ask about our program with United Fire Group! EMPLOYEE BENEFITS CBIZ AIA Contact: Dennis Begley 763-549-2260 / dbegley@cbizaia.com CBIZ AIA will provide AASP-MN member with quotes from multiple carriers for life insurance, health insurance, long-term care and disability insurance. UNIFORM & LINEN SUPPLIES AmeriPride Services Contact: Jim Dillon 651-955-1398 / jim.dillon@ameripride.com Discounted pricing to members on rental of uniforms, entrance mats, shop rags, etc. Purchases are also discounted. Members receive annual rebate equal to 10% of their business with AmeriPride each year. CREDIT CARD PROCESSING Association BankCard Services Contact: Mac Hardin 952-933-2026 / mach@retailfinancialservices.biz
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Competitive rates for AASP-MN members. Terminals and printers sold at cost. Monthly rental of equipment is also available. INDUSTRIAL & PAPER PRODUCTS Wipers & Wipes, Inc. Contact: Dennis Julson 651-486-4866 Discounts on industrial supplies and paper products. Free, next-day delivery is available in the metro area. Shipping free to outstate members with $100 purchase. WEBSITE AND INTERNET MARKETING SOLUTIONS Autoshop Solutions Contact: Margaret Klemmer 888-991-3449 / margaret@autoshopsolutions.com AASP-MN members receive a $500 discount off the Website Marketing Success Package set-up fee and special pricing on template websites starting at just $59/month and $149/set-up (regularly $79/month and $250 set-up).
TECHNICAL INFORMATION HOTLINE IDENTIFIX 800-288-6220 Members enjoy discounted prices on the industry’s #1 technical information hotline, Direct-Hit. BUSINESS FORMS/CALENDARS AASP-MN Contact: Jodi Pillsbury 612-623-1110 / jodi@aaspmn.org Discount rate on printed business forms and calendars. SALES, MARKETING AND CUSTOMER SERVICE SOLUTIONS eMarketing Sherpas Contact: Frank Terlep 888-377-2661 / www.emarketingsherpas.com eMarketing Sherpas provides AASP members up to a 10-percent discount on its Demand Engine CRM Suite, Review Engine online review and reputation marketing system and its Digital Lobby point of sale digital signage, menu board and interactive kiosks solutions.
Net Driven Contact: Jon Napoli 877-860-2005, ext. 400 / jnapoli@getnetdriven.com Net Driven is a market leader in website and internet marketing solutions designed exclusively for the automotive industry. AASP-MN members who choose Net Driven are eligible for a $500 discount off their 1st year setup fees. For more information, contact Jon Napoli.
INFORMATION PROVIDERS Mitchell1 Contact: Mitchell1 Representative 888-724-6742 x 6986 AASP members are eligible for special Mitchell 1 information and management programs at significant discounts. For more information, log onto www.mitchell1.com or contact the Mitchell 1 representative at 888-724-6742, X6986.
AUTO EMPLOYEE ASSESSMENT Assessment Associates International Contact: Ron Page (952) 854-6551 / ronald.page@aai-assessment.com www.auto.aai-live.com Designed to help facilitate and enhance hiring decisions. AASP-MN members receive 50 percent off retail price and starts as low as $15 per assessment.
Mitchell International Contact: Mitchell International Representative 800-238-9111 AASP members receive a 15% discount on any Mitchell RepairCenter TechAdvisor package. Visit http://repaircenter.mitchell.com/Catalog/OEM Repair.aspx for more information.
AASP-MN News
PAYROLL PROCESSING CBIZ Payroll Contact: Carrie Hobrough 612-436-4620 / chobrough@cbiz.com Members receive 20% discount off standard payroll products and services (excluding 401k). Members who switch prior to June 30 will receive first month of payroll processing free. CHECK GUARANTEE SERVICES Certegy Check Services Contact: Heather Ellis 952-240-5017 / heather.ellis@fisglobal.com Discount rate of .75% to AASP-MN members. Use existing credit card terminal. Fast claim payments. BUSINESS COACHING 180biz 540-833-2014 / info@180biz.com Website: www.180biz.com Members receive a 20-percent discount on one-onone sales and management coaching programs (covering financial planning & analysis, strategic marketing, leadership and personnel development) without long-term commitments. Members also receive a 25-percent discount on monthly sales & management webinars as well as a 20-percent discount on all 180BIZ advisor training programs. LEGAL CONSULTATION Fryberger, Buchanan, Smith & Frederick 800-496-6789 Members receive free, over-the-phone legal assessment and consultation (some restrictions apply) with an attorney who specializes in the area of law that is the subject of the call.
AASP-MN News
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