Virginia Automotive Report E Newsletter for July 2016

Meet Your New VAA President

Scott Brown By Steve Akridge

It was 1969– the year the Beatles broke up, we put a

man on the moon, the orginal music festival Woodstock was

held, and the war in Vietnam continued. It was also the year

U.T. Brown and his wife, Yvonne opened a Shell service station

on a small corner in Springfield, VA, and thus Cardinal Plaza

Shell was born. Their son Scott was in kindergarten at the time,

but he soon realized if he was going to spend much time with his

Dad, it would need to be at the shop.

As he got older, his early jobs included washing custom-

er’s windows (he kept a milk crate to stand on), checking water

in batteries, restocking the shelves and making popcorn for the

customers. From there he began working in the shop, perfom-

ing maintenance jobs such as oil changes, and when he turned

16 got to drive one of the tow trucks– as Scott puts it, “I was very

cool”. He attended West Springfield High School where he

found his love for sports, especially football and basketball, and

he met his future wife, MaryBeth, who he took to the senior

prom. From there it was off to UVA where he graduated with

distinction in 1986, also the year he and MaryBeth married. They

have 5 children: Craig and Josh who both graduated from JMU,

Ava, who graduated from Catholic University, Liza, a rising junior

at Virginia Tech and Jack who just finished 7th grade. He has

coached all his kids growing up, mainly soccer and basketball,

and stil coaches two teams today.

That quiet corner of Springfield in 1969 is now one of the

busiest intersections in Northern Virginia. Cardinal Plaza Shell has

thrived over the years and is known for outstanding image,

charity, community service and elaborate holday displays. I

can tell you from experience, their Christmas decorations are

amazing, and if you are ever visting the area during the holiday

season, make it a point to stop by. Scott is the first to give grati-

tude for the lessons he has learned from his Dad and Mom, and

the opportunity he has been given. Despite a busy personal

and business life, Scott has always found the time to give back

to the industry that has been so good to him. In addition to the

extensive work he does for the VAA, he has also served the Shell

National Dealer Advisory Council, the Tech-Net National Adviso-

ry Board, the Auto Care Association, and the Car Care Profes-

sional Network.

Scott, thank you for all you do to help other shop own-

ers, and make our industry a better one. We are very excited to

have you as our President for the next two years!

VAA 2016– The Homestead Return visit sets new VAA records

Our return to the Allegheny Mountains and the

majestic Homestead Resort proved to be a winning

combination for our VAA dealers and suppliers. The

weather was perfect, and the Homestead staff did

another exceptional job for us. And we did set some

new convention records this year: Our overall attend-

ance at the Saturday evening Trade Expo/Reception

was 420, which is a new high for VAA, and broke last

year’s attendance at Colonial Williamsburg (our previ-

ous high). We had 59 attending a VAA show for the

first time, and a total of 36 Sponsors, both new rec-

ords. The Trade Expo, with 80 booths, was our second

highest, and with 84 golfers at the VAA Open, this tied

for first our largest golf tournament ever. Our 4 speak-

ers, Danny Sanchez, Bill Ford, Dave Crawford and

John Gamauf were all fantastic, each with their own

message which gave our members plenty of new ide-

as to take back with them. Our Peer to Peer

Roundtable discussion, moderated by John Gamauf,

had over 200 in attendance, and was again a big hit.

It has become one of our most popular sessions each

year. And the hidden value that those who attend

regularly already know– the opportunity to talk with

one another in a relaxed setting is priceless. It’s a

place where relationships are made, friendships are

renewed, and business does get done. It’s where

“the best of the best” come together, and this special

weekend is one of the few opportunities to join to-

gether, have a great time and discuss this industry we

all make our living in. Catch some of the action in the

pictures on the following pages. We give a big thank

you to our Sponsors, listed on page 5 for their support

of VAA and our Convention.

Mark you calendar for April 28-30, 2017 as we return to

historic Colonial Williamsburg and the Williamsburg

Lodge.

Scott Brown (R)

receives his gavel

from outgoing Presi-

dent Bobby Cutchins

Cardinal Plaza Shell Gang L-R: Chris

Chagnon, Jon Ford, Craig Brown, Scott

Brown, Jack Brown, MaryBeth Brown, Josh

Brown and Alyssa Hirsch

2

www.unifirst.com

www.carrolltire.com

www.federatedinsurance.com

www.parrishtire.com

www.morrisdist.com

www.odtdirect.com

www.atd-us.com

PLEASE THANK AND SUPPORT OUR VAA ADVERTISERS

www.forparts.com

www.tirecenters.com www.hotrodprocessing.com

www.maxfinkelstein.com

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VAA 2017 Returns to Colonial Williamsburg

And the Williamsburg Lodge

April 28-30, 2017

Mark your Calendar and plan to join us

In the historic Revolutionary City

VAA Board of Directors

President: Scott Brown

Cardinal Plaza Shell, Springfield

Northern Virginia Region

President-Elect: John Kline

Old Dominion Tire, Midlothian

Richmond Region

Vice President: Mark Anderton

First Landing Auto Care, Virginia Beach

Coastal Virginia Region

Secretary-Treasurer:Jerry Tatum

Leete Tire & Auto, Petersburg

Richmond Region

Past President: Bobby Cutchins

Bobby’s Tire & Auto Care, Franklin

Coastal Virginia Region

Executive Director: Steve Akridge

VAA, Midlothian

Richmond Region

Directors:

Northern Virginia Region:

Myron Boncarosky, Virginia Tire & Auto, Fairfax

Chris Barnett, Tire Tread Service, Fredericksburg

Richmond Region:

Clint Farrar, American Tire Distributors, Richmond

Mike Fortune, Cloverleaf Tire & Auto, Richmond

Tom McClain, Napa Auto Parts, Richmond

Coastal Virginia Region:

Mike Scaglione, Arrowhead Auto & Align, Virginia Beach

Lynchburg Region:

Eric Hughes, Harris Tire, Lynchburg

Brenda Carpenter, Carpenter Tire, Lynchburg

Southwest Virginia Region:

Travis Leath, Twin County Tire & Auto, Galax

Bill Hoal, Carroll Tire Co., Roanoke

Shenandoah Valley Region:

Steve Crawford, Hepner Tire, Woodstock

Terry Westhafer, Central Tire, Verona

Tom Jones, Fisher Auto Parts, Staunton

Larry Williams, University Tire & Auto, Charlottesville

Express Auto Service, Dan Richie

Fredericksburg VAA Sponsor: John Kline

Kukui Corporation, Kevin Utile

San Jose, CA VAA Sponsor: Steve Akridge

Capital Car Care Inc., Scott Stern

Springfield VAA Sponsor: Scott Brown

Lee Hill Auto Service, Mark Tures

Fredericksburg VAA Sponsor: Scott Brown

Chevron, Steve Collins

Chesterfield VAA Sponsor: Jim Fetscher

Conceptual Minds, Inc., Taran Sodhi

Arlington VAA Sponsor: Howard Aburn

B&L Automotive, Brad Brown

Newport News VAA Sponsor: Greg Buckley

Help VAA grow– recommend someone you know and

sign them up online at www.vaauto.org click Join VAA

Welcome New VAA Members

VAA Office:

Steve Akridge, Executive Director

Email: sakridge@vaautomotive.org

Web: www.vaautomotive.org

6126 Fox Haven Place

Midlothian, VA 23112 Phone: 804-739-1400

Steve “Fish” Crawford, Hepner Tire, Woodstock (Chair)

Scott Brown, Cardinal Plaza Shell, Springfield

Travis Leath, Twin County Tire, Galax

Clint Farrar, American Tire Distributors, Richmond

Tom Jones, Fisher Auto Parts, Staunton

Eric Hughes, Harris Tire Company, Lynchburg

Chuck Shifflett, University Tire & Auto, Charlottesville

Bobby Cutchins, Bobby’s Tire & Auto Care, Franklin

A Sincere “Thank You” to these gentlemen for their hard

work behind the scenes, and their commitment to make

this a special event. Work for 2017 has already begun!

Thank you 2016 Convention Committee

4

President’s Corner

By Scott Brown

I’ve always enjoyed reading the President’s Corner article

when the VAA newsletter comes out but I never thought

about how hard it is to actually come up with an idea

and write one. This is actually my second attempt. I re-

read my first effort and honestly, it was boring. So I delet-

ed it.

My oldest son got married last weekend and I’ve been

thinking a lot about my various families. The family I was

born into, my work family and most importantly my wife

MaryBeth and my five children. That’s not right, it’s six kids

now, including my new daughter-in-law!

How does this relate to the VAA? For me the VAA is fami-

ly. It brings a sense of community, of caring, of belonging.

It is this sense of community that drives me every time I’ve

become involved in anything involving significant effort.

If you stop to think about it, when you have fulfilled a no-

table achievement in your life it probably involved a core

group of people. When you find the right group, don’t

you feel a responsibility to them? And don’t they return

the feeling?

These are the people that encourage you and guide you.

The people you never want to let down. The people that

check up on you if you don’t show up, that push you to

define your dreams and demands you achieve them.

When others tell you your goals are impossible, they en-

courage you. Your core group holds you accountable

when you have a period of low motivation. They are a

community. A family.

What is my VAA family? The VAA is not the family I was

born into; it is the family I chose. If you are reading this,

you are a part of it. The VAA is an amazing group of shop

owners, supplier members & of course Steve, our Execu-

tive Director. Truly the best of the best. When I joined the

VAA I had no idea of the friends I’d meet. Now, when I

have a problem or an idea I can pick up the phone or

send an email for help. There really isn’t an issue that fac-

es us that someone in the VAA hasn’t successfully navi-

gated.

The number one problem I hear about when I speak to

shop owners around the state revolves around employ-

ees. Mainly that shop owners cannot find suitable, moti-

vated, skilled employees. I think the solution for each of us

is to create, in our shops, the same type of caring, nurtur-

ing, uplifting atmosphere that we seek for ourselves.

I don’t think of the techs, service advisors and cashiers

from Cardinal Plaza Shell as employees; they are my fami-

ly. We work and play together as a group. We spend a

great deal of time, effort & money on training & team

building because I truly want my family to have great ca-

reers and to be proud of where they work.

To begin to solve the greatest challenges facing us as

individual shops or as an industry we must look to our col-

leagues while leading and developing our people. The

VAA is here to help.

Until next time…. Scott

DOL Issues Long Anticipated Final Rules-

Overtime Regulations

On May 18, 2016 the Department of Labor (DOL) released the long

anticipated final rules defining Overtime Exemption requirements, in-

cluding guaranteed salary requirements, for the White Collar Exemp-

tions- Executive, Administrative, Professional and Highly Compen-

sated.

Key provisions of the final rule are as follows:

1) The new rule goes into effect December 1, 2016.

2) The new guaranteed salary requirement is a minimum of $913.00

per week ($47,476.00 annually). This salary requirement applies to the

Executive, Administrative and Professional Exemptions

3) For the Highly Compensated Exemption, the new salary require-

ment is $134,004.00.

4) The final regulation establishes a mechanism to update the salary

requirement level every three (3) years.

Of noted importance, and as it relates to the Executive, Administra-

tive and Professional Exemptions (Highly Compensated excluded), is

the ability for the employer to apply Non- Discretionary Bonuses and

Incentive Payments (including a valid commission payment) to satisfy

up to 10% of the guaranteed salary level requirement of $47,476.00.

Please note that Non-Discretionary Bonuses and Incentive Payments,

such as commissions, must be well defined and meet the DOL’s re-

quirements under the regulation.

The DOL did not change any of the White Collar Exemption duties

tests. Further, the DOL permits the compliant use of the Fluctuating

Workweek Method of Payment which is a pay plan that may be rec-

ommended for select positions/cases by SESCO.

Otherwise, there are no other significant changes except for the fol-

lowing:

1) Higher Education: Bona fide Teachers, Coaches, Graduate Assis-

tants, and Academic Administrative Personnel: Each of these positions

is not affected by the new rules. SESCO clients in this sector should

contact us to discuss in further detail as each of these position terms

are very well defined.

2) State and Local Governments: The final rules does not alter the cur-

rent requirements for state and local governments or subdivisions

thereof. The use of "Comp Time", hours of work provisions for police

and firefighters, elected officials and staff and legislative branch em-

ployees will not be affected.

3) Non–Enforcement for provider of Medicare-funded services for indi-

viduals with Intellectual or Developmental Disabilities in residential

homes and facilities fifteen (15) or fewer beds: Enforcement of the

final rule is delayed until March 17, 2019 for those SESCO clients who

meet this definition of a Provider.

Article continued on Page 11

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VAA Convention Sponsors We give a big Thank you to our 2016 Sponsors . We are grateful for this show of financial support to our Convention,

and to the work VAA does every day. We ask our Dealer Members to show your thanks to this special group of VAA

Partner Supplier companies whenever you can by giving them your business.

Platinum Sponsors

Advance Professional Mark Williams

Autopart Intl. Jason Graybill

American Tire Distributors Dave Kavanah

Carroll Tire Company Bill Hoal

Federated Insurance Austin Bond

Justice Tire Distributors Ron Justice

NAPA Auto Parts /

NAPA Richmond BDG Tom McClain

Gold Sponsors

Mohawk Rubber Sales Brad Steiger

Parrish Tire Company Donn Grant

TCI Tire Centers Inc. Clay Whittaker

Silver Sponsors

3-R Contracting, LLC Lee Shifflett

Atlantic Tire Distributors Jim McCullough

Automotive Training Institute Dan Kelly

Bridgestone Firestone Robert Pritchett

Continental Tire Company Caitlyn Hourigan

Cooper Tire & Rubber Co. Jonathon Lucas

Emanuel Tire of Virginia Elizabeth Krajewski

Falken Tire Joe Aruta

Fisher Auto Parts & Vendors Ed Embrey

Goodyear Tire & Rubber Co. Charley Studeny

Hankook Tire USA Nick Jones

Hot Rod Processing Ed Mann

Kukui Todd Westerlund

Max Finkelstein, Inc. Kurt Feinswog

Michelin North America Shannon Fuller

Mudlick Mail Tim Ross

Myers Tire Supply & Equipment Tony Waugh

Nexen Tire America Edwin Corleto

Nitto Tire USA Bill Skutul

Old Dominion Tire Direct Jon Hayden

Olympus Imported Auto Parts Chapin Hanna

Papco Oil Bryan Patterson

Pirelli Tire LLC Harrison Gaylord

Pugh Lubricants Mike Halsey

Unifirst Corporation Mark Lewallen

Yokohama Tire Corp. Carl Casalbore

VAA Trade Expo Exhibitors

3-R Contracting, LLC

Advance Professional / Autopart International

American Tire Distributors

Andreoli & Associates, Inc.

AP Exhaust

Ashcraft Associates

Atlantic Tire Distributors

Automotive Training Institute

Autoshop Solutions

BG Products & Services Crovato

Cardone Industries

Car-Part.com

Carroll Tire Company

Chevron Products Company

Continental Tire

Cooper Tire & Rubber Co.

Dayco Rubber

Dorman Products

East Penn Batteries

Emanuel Tire of Virginia

Excel Tire Guage

Falken Tire

Federal Mogul

Federated Insurance

First Data Merchant Services

Fisher Auto Parts

Goodyear Tire & Rubber Co.

Go Powertrain

H. N. Funkhouser

Hankook Tire USA

Heritage-Crystal Clean

Hot Rod Processing

Hunter Engineering

Justice Tire Distributors

Kukui

KT Automotive Products

Max Finkelstein Inc.

Michelin North America

Mitchell 1

Mohawk Rubber Sales

Mudlick Mail

Morris Distributing

Myers Tire Supply & Equipment

NAPA Auto Parts

Net Driven

Nexen Tire America

Old Dominion Tire Direct

Olympus Imported Auto Parts

Omni-United USA Timberland Tires

Optimize Social Media

Parrish Tire Company

Papco Oil

Pirelli Tire LLC

Pugh Lubricants

R. O. Writer

Schrader

Standard Motor Parts

TCI Tire Centers Inc.

TCS Technologies

Tire Industry Association

Unifirst Corporation

Gfk

V2V Technologies Inc.

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 3% 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 ex-

panded 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 af-

termarket."

Fewer Service Bays

Car and light truck repair outlets in the U.S. operated over 1.17

million service bays at mid-year 2015, down approximately 35,000

bays from ten years earlier. The service bay count declined across

the U.S. despite a 15 million-plus jump of vehicles in operation

(VIO).

Service Stations and Garages Increase Bay Share

Service Stations and Garages operated the largest share of car

and light truck service bays in the U.S. at mid-year 2015, an esti-

mated 30%. Service Stations and Garages suffered a small loss in

bay numbers over the past ten years, but their bay share expand-

ed as a result of the shrinking universe of service bays.

Vehicle Dealers Hit Hard

Vehicle Dealers accounted for approximately 25% of light vehicle

bays at mid-year 2015, down nearly 60,000 from their near-peak

bay population ten years earlier. Dealers suffered over two-thirds

of the total light vehicle service bay loss during the past five years.

Repair Specialists Soar

Repair Specialists (outlets performing a limited menu of vehicle

repairs) accounted for the third- largest light vehicle bay share in

the U.S. at mid-year 2015 at 19%, up from a 16% bay share ten

years earlier.

Repair Specialists added more than 30,000 bays nationwide be-

tween 2005 and 2015.

Tire Stores Expand Bays

Tire Stores conducting light vehicle repair (in addition to tire sales

and related tire repairs) held an approximately 11% service bay

share at mid-year 2015, up from 10% during 2005. Tire Stores add-

ed thousands of bays between 2005 and 2015 as their bay share

rose approximately one-tenth.

Foreign Specialists Record Strongest Bay Growth

Foreign Specialists (outlets forcing on foreign car and light truck

nameplate repair, imports as well as transplants) operated nearly

85,000 service bays at mid-year 2015, over 7% of all light vehicle

bays.

Foreign Specialists increased their bay count by 15,000 over the

past five years, elevating their bay share by nearly one-quarter.

All Other Outlets Falter

The residual category of All Other Outlets operated less than 9% of

service bays across the U.S. during 2015.

The bay share of All Other Outlets declined over the past ten

years, reflecting the shuttering of more than 20,000 service bays by

this group of outlets.

The category of All Other Outlets includes a wide range of service

operations, including Auto Parts Stores with bays, as well as Job-

bers with bays, Discount Stores/Mass Merchandisers, and other

outlets with light vehicle service bays.

Article continued on Page 11

6

Scenes From VAA 2016 at The Homestead

The Speakers

John Gamauf Dave Crawford Danny Sanchez Bill Ford

7

Distinguished Member Award goes to Tony Waugh Emmerson Miles, Matt McCoy also Recognized

During the Saturday evening awards banquet, we recognized Tony Waugh with the Association’s highest

honor, The Distinguished Member Award. In recognizing Tony, Executive Director Steve Akridge spoke of

Tony’s many accomplishments with the VAA, including his serving on our Board of Directors for 22 years,

numerous committees and as our President from 2001-2002. As Steve put it, “Tony has always been there

for us when we needed him”. Steve went on to say he met Tony for the first time at a VAA Board event

over 30 years ago, which has developed into a close friendship over the years. Tony, thank you for all

you have done to help the VAA, and congratulations on this very deserving recognition!

At the same event, we recognized Emmerson Miles of Miles Auto Service in Richmond and Matt McCoy

of M & M Tire in Blacksburg, for their service to VAA on our Board of Directors. (Matt was unable to at-

tend the event).

Matt McCoy has been on our Board since 2010, served several committees, and is the second genera-

tion from his family to serve our Board. His Dad, Mike McCoy was on our Board 20 years ago.

Emmerson Miles has served on our Board since 2009 and was a member of our Legislative Committee.

He joined us for countless trips to the General Assembly and testified before many committees, lending

valuable opinions from a shop owner’s perspective.

We thank Matt and Emmerson for the countless hours away from their business to serve the VAA as a vol-

unteer leader on our Board.

Tony Waugh (L) is congratulated

by Steve Akridge

Emmerson Miles (L) is congratulat-

ed by Steve Akridge

More Scenes From VAA 2016 and The Homestead

Our Moderator, John Gamauf, giving some opening remarks

8

Peer to Peer Roundtable Draws a Lively Discussion One of the true values at our Convention, enjoyed by both dealers and suppliers, is the opportunity to

come together and openly discuss the issues that impact our industry. Moderated by John Gamauf, this

year was no exception. The session is unscripted and open to anyone who wants to speak, and the over

200 in attendance found plenty to talk about. Some of the subjects included recent sales tax audit experi-

ences, some negative perceptions of the state safety inspection program (and an initiative the VAA will be

addressing this year), health insurance related issues, osha inspection experiences, hiring new technician

experiences, credit card processing and chip readers, and cyber liability issues.

Mike Scaglione making a point

concerning safety inspections

Emmerson Miles makes a point to John Gamauf

Terry Westhafer discussing his

sales tax audit

Fish Crawford takes ad-

vantage of some one on

one time with John Gamauf

Federated Insurance’s Austin

Bond discusses cyber security

And the winners are...L-R: Kim Dillon of Buena Vista- $100, Marggie Ortiz of Fairfax- $200, Jake Haddon of Midlothian- $300, Preston Battle of

Emporia- $400, and Chuck Shifflett of Charlottesville- $500.

Scenes From the VAA Trade Expo & Reception 80 Exhibit booths, over 420 attendees, $1500 cash given away, 4 open bars...quite a show

9

Closest to the Pin winner

Mike Heatwole

The 2016 VAA Open Champions shot 12

under. L-R: Larry Brooks, Adam Cornwell,

Donn Grant, Jason Graybill

It was a beautiful spring day at The Home-

stead, as 21 teams competed in the VAA

Open

The Open Runner up team also shot a net

60. L-R: Mac Ellet, Danny Sanchez, Patrick

Little, David Little

“Oh well, someone has to finish

last”. L-R: Mike Bowles and Frank

Ward. Not pictured: Aric Tobloeski

and Caleb Van Deman

“Man, this guy can putt”

John Miller L-R: Jonathon Lucas. Nick Jones, Ron Justice,

Jim McCullough

Scenes From The VAA Open at The Homestead Old Course

The VAA Golf Committee hard at work.

L-R: Clint Farrar, Fish Crawford, Ed Embrey Third Place Team was 1 shot behind

L-R: Larry Pindell, Dave Crawford,

Bill Isenhart, Mike Little

L-R: Fish Crawford, Jerry Tatum

Long Drive Winner

Mike Holmes

Built in 1892, the #1 teebox at the Old

Course is the oldest teebox in continuous

use in America

10

Closest to the Pin winner

Steve Roland

The Final VAA 2016 General

Assembly Report will be

Emailed the week of July 18.

Please look for it in your Inbox.

Expanding Independent Bay Share

Independent outlets expanded their service bay share be-

tween 2005 and 2015, climbing from 71% to 75% of all car

and light truck bays.

Repair Specialists increased their bay population over

30,000 during this ten-year span, while Foreign Specialists

added approximately 15,000 bays.

Tire Stores increased their bay operations by 5,000 from

2005 to 2015.

Service Bay Decline

Dealer service bay share fell from 29% to 25% as Dealers

closed nearly 60,000 service bays during this period.

The residual category of All Other Outlets slipped from

123,000 to just over 100,000 bays over these ten years.

Service Stations and Garages bay count fell nearly 7,000

from 2005 to 2015.

Six Major Takeaways

• Although total VIO (vehicles in operation) in-

creased 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 ten years, climbing from 29% to 30% of

total car and light truck service bays. Repair Specialists also

expanded their bay share, expanding from 16% to 19% of

all service bays nationwide.

• Foreign Specialists recorded the largest relative

increase in service bay share over this ten-year span, in-

creasing from less than 6% to over 7% of the light vehicle

bay population.

• Tire Stores recorded a moderate increase in bay

share, representing 11% of the service bay population at

mid-year 2015, up from 10% share ten years earlier.

• Vehicle Dealer bay share fell from 29% to 25% be-

tween 2010 and 2015, while the residual category of All

Other Outlets sank from 12% to 10% in bay share.

• Independent (non-Dealer) service bays increased

from 71% to 75% of all car and light truck service bays

across the U.S. during this ten-year span. This had a signifi-

cant impact on the strength of major types of repair outlets

and the product shares of individual distribution channels

supplying the light vehicle aftermarket.

3) Non–Enforcement for provider of Medicare-funded

services for individuals with Intellectual or Developmental

Disabilities in residential homes and facilities fifteen (15)

or fewer beds: Enforcement of the final rule is delayed

until March 17, 2019 for those SESCO clients who meet this

definition of a Provider.

SESCO Staff Recommendation- What Employers Should

Do NOW!

1) Assess your organization’s current liability by conduct-

ing a thorough review of salaried positions. Discuss and

confirm appropriate application of the White Collar Ex-

emptions based on the duties test alone.

2) Assess the hours of work performed by those salaried

positions of which their current salary is less than the new

guaranteed salary requirement. Determine if the position

(s) can be limited to 40 hours of work or less per work

week.

3) If necessary, and based on if hours worked exceed 40

in a work week (overtime), consider altering the position’s

compensation structure to ensure compliance:

• Increase the guaranteed salary to the new required

threshold of $47,476.00.00 ($913.00 per week). It is im-

portant to note that simply increasing the salary may not

make the position exempt from overtime. The position

must also meet the duties tests as outlined in the White

Collar Exemptions.

• Change the salary to an hourly rate of pay with over-

time (1½ times the regular rate of pay) for any hours that

exceed 40 in a work week.

• Implement the Fluctuating Workweek Method of pay-

ment. This method of payment provides a guaranteed

salary per week with a straight time earnings calculation

providing half (1/2) time for hours that exceed 40 in a

work week. Please contact SESCO if you wish to discuss

this method of payment further.

• Revise the current pay plan implementing a Non-

Discretionary or Incentive element applying up to 10% to

the salary threshold.

• For Retail Organizations, implement the partial Retail 7i

exemption from overtime. This partial exemption requires

that the employee earn at least half (51%) or more of the

total compensation from a Non-Discretionary Bonus or

Incentive pay plan. Further, the position must yield an

hourly rate of pay of least one and one half (1½) time

minimum wage (or $10.88/hour) for all hours worked. This

partial exemption does not remove the requirement for

an employee to maintain a true and accurate time card

for all hours worked.

4) Contact SESCO to schedule a Wage and Hour compli-

ance audit at (423) 764- 4127 or sesco@sescomgt.com.

As a member of VAA, please call us to explore this exclu-

sive offering which will provide the audit and ongoing

telephone/email support.

Lang Research article continued from page 6 Sesco article continued from page 4

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