The federal Department of Labor is proposing an increase in the base salary level of exempt employees who work primarily by salary and do not receive overtime pay. The increase would be about a 50% jump in a single year from $23,660 to $35,308 annually.
"This increase is a daunting single step for a small business to make in one year," NNA President Andrew Johnson writes in a public statement. "It is more likely to lead to job cuts than a general boost for employees. The National Newspaper Association proposes instead that the increase would be set to rise gradually over six years."
NNA is seeking support from community newspapers to join small businesses across the country in signing petitions to persuade Labor Secretary Alexander Acosta that small businesses need a chance to absorb this increase in a normal business fashion.
NNA compiled this list of Questions and Answers about Community Newspapers and the Fair Labor Standards Act.
How will the Department of Labor’s new proposed rules for overtime affect community newspapers?
1. Who is required to get overtime now and what changes with the 2019 proposal?
A. Anyone who works more than 40 hours a week, unless they are specifically exempted from the Wage and Hour rules. To be exempted, they must qualify in three ways.
1) They get a set salary that is not changed regardless of their work week or output;
2) They make at least $23,660 each year and
3) their responsibilities are sufficient to meet the requirements in the law (the “duties” test.)
If the 2019 proposal goes into effect, only the salary threshold will change. It will go up to $35,308 each year.
2. Is that all?
A. No, employees of newspapers with circulations under 4,000 are exempt because of a law passed by Congress. But the Labor Department may add together circulations of all titles within a company if some operations are shared. Even a shopper or TMC circulation could be counted.
Small newspaper companies with non-newspaper revenues may have to segregate their payroll to keep the staff involved with other aspects of the business on a separate payment schedule. Also, certain IT employees may be exempt, as well as people whose PRIMARY work is in sales and is OUTSIDE the office.
Highly-compensated employees paid an annual compensation of $100,000 are exempt provided the guaranteed base pay is at least $455/week. There are some other exemptions not applicable to newspapers, such as doctors and lawyers, American Samoans and movie industry people. And owners.
3. If a worker is exempt, that means he or she doesn’t get overtime for working more than 40 hours a week, right?
A. Correct. Those employees are considered highly-compensated with opportunities for advancement and work that is sufficiently specialized that they can be expected to work the number of hours required by the job.
4. If we pay people on a salary basis, and not hourly, are they exempt?
A. No, not necessarily. They have to be over the $23,600 annual rate and they must meet one of the duties tests.
5. Examples of the duties tests?
1) exempt executives with a primary duty of managing a department or project. They must supervise at least two employees and have the ability to hire and fire.
2) Professional employees whose specialized knowledge usually acquired by prolonged instruction or study.
3) Administrative employees whose primary duties include the performance of office and non-manual work that requires exercise of discretion and judgment on matters of significance.
6. Where would a community newspaper reporter fit in?
A. Several courts have spoken on that subject and the Labor Department has followed the rule that community newspaper reporters are not exempt. Editors may be exempt, but would fall under the executive duties test, meaning they would have to supervise at least two employees and have hiring and firing responsibilities—or at least a very significant say in the hiring and firing.
7. How about sports editors?
A. Generally non-exempt unless they oversee other employees.
8. What do we do when news events—like a football game—cause a sports editor to go over 40 hours a week?
A. Either pay time-and-a half for hours in excess of 40, or give the reporter enough compensatory time off within the pay period so the hours remain below 40.
9. What about ad sales staff?
A. If they work mostly inside on the phone, they would be non-exempt, unless they are at the executive level with supervisory experience. If they are “customarily and regularly” engaged outside the office, they may be exempt.
10. Can bonuses and commissions count?
A. Yes, if they are not discretionary. For example, if an employee earns a bonus every time she hits budget, and it is for a pre-set amount, that compensation can count. But if the company reserves the right to give bonuses only because it had a “good” year, that bonus would not be counted toward the exempt salary.
11. What about “contract employees?”
A. Complex question. If they are leased employees belonging to another company, that other company has the wage and hour obligation. If they are regular employees who simply have an employment contract with your company, they fall under the Wage and Hour rules and must fit within one of the exemptions above to be exempt. If they are truly independent contractors (not just people who work with your office but don’t really qualify under state or federal rules), they also must fit within one of the exemptions to be exempt.
12. Are other small businesses being affected by this proposal?
A. All employers in the United States are affected unless their employees are specifically exempted. For example, teachers in public schools are generally exempted, as are doctors. But nurses and coaches may not be exempt. Lots of factors can count toward exempt/non-exempt, such as education levels, how work is performed and whether there is an industry-wide exemption in the law. Consult an attorney when in doubt.
13. What is about to change?
A. The Department of Labor proposes to change just the base salary to $35,308 annually.
14. Does Congress have to act for this new law to go into effect?
A. No, the Labor Department has sole authority to make these rules. Members of Congress may choose to comment in letters to the Department.
15. When will this rule go into effect?
A. Contrary to some news reports you may have seen, it is NOT in effect yet. The implementation date will be set in the final rule. First, the proposed rule will appear in the Federal Register (which hasn’t happened yet). Then the public will get 60 days to comment. Then the agency will take some time considering the comments and writing the rule. Count on something to show up in 2019.
16. What is NNA doing?
A. NNA will encourage the Labor Department to recognize the challenging economic conditions in much of America outside of booming cities and coastal areas. If local economic stability will not support a 50% increase in salaries for whole categories of employees, employers will be forced to lay off, set up salary freezes or cut back on the company’s mission. A more sensible approach for these businesses would be to phase in the increases over a period of years. A petition seeking that more gradual approach is available on NNA’s website at www.nna.org.