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June Newsletter
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President, Brandi Manning & Vice President, Jennifer Welch representing MAA at the National Apartment Association Conference & Exposition. We can’t wait to hear what all they learn and implement new ideas for the association & our members!

New overtime rules mean more money for workers, more challenges for employers

 

                                                        
Posted by: Ted Carter in Govt/PoliticsMBJ FEATURE May 26, 2016

The U.S. Department of Labor’s new rule that doubled the over-time pay threshold puts more money into the pockets of 40,000 Mississippi workers but forces businesses to rethink their work arrangements with managers and supervisors.

Managers paid below the new threshold of $47,476 ($913 a week) must be paid overtime regardless of how many hours in a work week they devote to managerial, or white-collar, duties.

Businesses, non-profits and public-sector entities must decide by the law’s start on Dec. 1 how to compensate the managers and supervisors they depend on to work when needed in exchange for flexibility and other benefits.

Bill McPherson co-owner of 50 Double Quick convenience stores in the Mississippi and Arkansas, has been bracing for the overtime changes for nearly a year. The choice: Pay the higher salary or begin paying exempt managers by the hour and paying time-and-a-half for any work over 40 hours.
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“You have to put them on the clock,” McPherson said in an interview late last year, explaining the company’s profit margin is too small to bump store managers above the $47,476 a year.

The new threshold marks the first rewrite of wage and hour rules in the Fair Standards Labor Act in more than 35 years, replacing the current threshold of $23,660 ($455 a week). The new threshold matches the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region (currently the south).

The $47,476 is to be adjusted to inflation every three years. The Labor Department has promised to give employers a 150-day notice on changes to the threshold starting in 2020.

The Labor Department says 40,000 Mississippi workers are among the 12.5 million nationally who will become newly eligible for overtime pay.

The old rule let employers classify workers as exempt from overtime rules as long as the worker met the “duties test” by which he devoted at least 50 percent of his working hours to managerial functions. That is no more, said Tommy Siler, an employment lawyer and partner with Phelps Dunbar’s Jackson office.

“Under the new rule, you are not exempt if you do not meet the minimum salary level test, no matter what your duties are,” Siler said..

The private sector won’t be alone in facing the work-scheduling and pay challenges posed by the new overtime provisions of the Fair Labor Standards Act, of which the federal wage and hour law is a part.

“City and county governments will get hit with a lot of impact,” Siler said.

He noted the quandary faced by the county and municipal managers who oversee small town police and fire chiefs as well as public works directors and other key managers in a local government. If they aren’t making the $47,476, suddenly the hours they put in will be an issue.

Time cards may be seen as demeaning by such workers but the alternative would be to pay them over the annual threshold, a genuine fiscal burden for Mississippi’s small towns and rural counties, according to Siler.

“It’s going to require looking at things a lot of different ways,” he said.

Public and private sector managers and department heads who have traditionally been considered exempt from federal overtime rules now must be paid over the threshold or go on a time clock and be paid overtime, Siler added.

Ahead of the release of the overtime changes, the National Association of Counties warned the new rule which the DOL (Department of Labor) developed without consulting local government partners may have significant unintended consequences for them.

The rule will be especially concerning to county officials in low-wage states such as Mississippi, said the National Association of Counties, whose membership represents 3.3 million people.

“We’re concerned that this is a one-size fits all rule that given regional economic variation could play out to the detriment of county services and residents,” Association spokesman David Jackson said after last week’s overtime announcement.

The Labor Department says the 50 percent rule for an overtime designation remains unchanged, though the new threshold shortens the pay ranges to which it applies. The rule specifies exempt status for workers paid above the threshold who spend at least half their time in managerial or supervisory roles. However, many in such jobs end a typical work week having done more line work than supervisory work.

Take retail, for instance, Siler said. “Retail is seven days a week, some are open 24 hours a day. The manager is responsible for everything that goes on regardless of the hour. It’s the same with restaurants. More managers are going to have to be managed more carefully.”

The overtime rule, Siler said, will force employers to make value decisions. “Does it make more sense to pay overtime or hire more people?” he said.

The National Federation of Independent Businesses (NFIB) advises members is to consider hiring more hourly full-time, part-time and seasonal workers or do some job restructuring to offset the expansion of overtime pay.

The Obama administration views the expanded overtime as a major financial lift for America’s middle class workers. But the NFIB, said it questions how broadly rank-and-file workers will look favorably on it. “Worker morale will likely decline as a result of this rule,” the NFIB said.

“The NFIB anticipates the change will especially hit low-to-mid level managers,” the organization said in a report to members. “These managers may currently make less than the $47,476 proposed threshold, but enjoy perks such as flexibility of hours and benefits like health insurance.”

One way businesses can still save on wages, Phelps Dunbar’s Siler said, is to use a fluctuating work week and payment schedule. This, he said, works best with workers who work, say, 30 hours one week and 50 hours the next. “You can have an agreement with the employee that you are going to pay them a set” figure.

“You still must pay overtime for hours over 40 in the fluctuating schedule. But you only have to pay half time,” he said, contrasting that amount with the standard time and a half that otherwise must be paid.

The key to qualifying this arrangement, Siler said, is the work week “really fluctuates.”
Each week must be looked at as a standalone, he advised, and said this means employers can’t offset hours from one week to the next.

Of course, if a manager is making just below the $47,476 mark, it may make more sense to give a raise above the threshold, Siler said.

“I think a lot of companies are going to have to look at this.”

Meanwhile, the total annual compensation threshold for the “highly compensated employee” overtime exemption will increase from $100,000 to $134,000, a figure the Department of Labor says represents the 90th percentile of earnings of full-time salaried workers nationally.

These workers are professionals with no management responsibilities but are not on the clock.

HVAC: Keeping a Cool Head in Times of Uncertainty

 

                                                          


 
       

By Paul Rhodes — June 2016

Who isn’t comforted by the soft murmur of the air conditioning as summer’s heat and humidity descends?

Who isn’t horrified when that whisper turns to a shout, or, even worse, goes dead silent?

This time of year, air-conditioners (AC) get a real workout—especially in the hottest and most humid of climates. And speaking of humidity, is there any better way to add mold and mildew to an apartment than an improperly functioning ac unit?

Where it concerns the repair/replace decision that was previously based on a simple “yes” or “no” flowchart, that chart now has many more question marks on it than it did even a year or so ago.

Currently there is a large amount of uncertainty with regard to AC repairs. What began as a moratorium on refrigerants that are shown to destroy the ozone layer (Montreal Protocol; Title VI, Federal Clean Air Act-Section 608) is morphing into new federal rules regarding climate change. (For details, see EPA Proposal 40 CFR Part 82 - 10/15/2015). Because of these rules and the amount of uncertainty in future viability of Original Equipment Manufactured (OEM) refrigerants, owners and management companies can struggle to identify a “for sure” solution that covers all situations.

Add to that a stereotypically undertrained maintenance staff at the property level and stress levels rise. In a recent study commissioned by CA Utility companies (“A Utility Perspective: HVAC Workforce Education and Training; Anne Marie Blankenship, Southern California Edison”) there was a huge percentage of residential systems (68 percent) with the incorrect amount of refrigerant. Changing refrigerants on a property can only make the problem worse.

Let’s take a look at the situation, and discuss possible solutions.

Under current law, ozone-depleting refrigerants will not be manufactured after 2020. The most common of these refrigerants used by many apartment systems is R-22. This means that while the price today is approximately $400 per 30-pound jug, it is expected to rise considerably by year-end. There are more cost-effective ways of keeping existing equipment maintained and operating.

Less-expensive alternatives are commonly called “retrofit” refrigerants. The name refers to the ability of a second refrigerant to be installed in place of the existing R-22 refrigerant that the system was designed to use. (Many of these refrigerants sold under various numbers such as: R-407C, MO-99, R-422D, R-421.) The nice thing about them is that they all cost less than R-22 and will operate in the existing equipment. Here are things to know about using these retrofits:

  • While they are marketed as “Drop-Ins,” the technician MUST remove the existing refrigerant and replace it with the retrofit. It is unsafe to mix refrigerants.
  • Many manufacturers do not honor any remaining warranty on the system or components if a non-OEM refrigerant is used in their systems.
  • Each refrigerant has its own pressuretemperature (P-T) relationship. This means that a technician using gauges that are set up for R-22 must research and use a separate P-T chart to determine proper levels.
  • Follow the retrofit refrigerant manufacturer’s instructions to install it correctly. In some cases, the technician must perform an oil change and/or flush out existing oil from the line-set (copper pipes that connect the outside unit to the inside air handler).
  • Be aware of non-SNAP-approved refrigerants. SNAP (Significant New Alternative Program) is the EPA’s official list of approved refrigerant alternatives. If the refrigerant is not SNAP approved, it’s not acceptable by the EPA to do the job.

If the current system is not worth repairing, communities no longer have an opportunity to purchase a new condensing unit that uses R-22, a commonly used option in the past.

Because of changes in efficiency requirements enacted by the Department of Energy in 2015 that mandate Seasonal Energy Efficiency Ratio (SEER) rating minimums, manufacturers are no longer producing equipment that use it. Pair this knowledge with the increased cost of energy and as a community we must change to a more efficient refrigerant. The new OEM refrigerant is not without problems.

If condenser replacement is required, a community must replace more than just a component. Replacing all of the components including the condenser, compressor, lineset, evaporator and possibly the air handler itself, may be required. Using R-410A in these components may not be workable due to its higher operating pressure. (Please refer to the Manufacturer’s rules for applicability of components.)

Owners and managers in this situation are faced with even more uncertainty. At the end of March, the EPA increased the pressure for manufacturers to discover a refrigerant that meets the new Climate Change standards by restating President Obama’s Climate change initiative. This policy is designed to decrease dependency on substances that have an adverse effect on climate change. These substances that have a high amount of CCP (Climate Change Potential) include all hydrocarbons. All current refrigerants commonly used in comfort cooling fall into this category, including R-410A. The result leaves equipment owners not knowing what the future holds.

R-410A was selected as the R-22 replacement because of its efficiency, and that it has no ill effect on the ozone layer. With government’s current focus on refrigerants that have low or no effect on climate change, R-410A’s useful lifespan is brought into question.

What a Community Can Do

Residents expect air conditioning in their apartment homes, and communities are responsible to provide and maintain it. Current equipment, no matter how old it is, will eventually break. There are things that minimize catastrophic failure at the property level in hopes of keeping current systems operating until there is a more proven option.

  • Perform preventive maintenance as required by manufacturer documents. This begins with changing the air filter regularly (minimum of every three months/four times per year) and continues with regular cleaning of the coils, both outside and inside. The frequency of cleaning depends on variables such as area of the country and the number of pets living in the apartment.
  • Ensure enough air flow through the system by not closing one or more vents.
  • Maintenance should be aware of the need for air to be able to leave a room, even when the door is closed. This makes it possible for the resident to have privacy, while allowing proper air movement in the system.
  • Use the correct method to ensure proper refrigerant levels in the system. Depending on system design, a technician should be using either the manufacturer’s stated weight, required superheat or system sub-cooling as the method to make any adjustments.
  • Prevent refrigerant leaks by maintaining caps and seals on service valves.
  • Before installing any refrigerant, remove moisture by performing a proper vacuum. For R-22 systems, this requires an evacuation down to 500 microns. R-410A requires a 250-micron vacuum. To verify, using a vacuum gauge is required.
  • Take advantage of training opportunities at local apartment associations and from supplier partners when possible.
  • Utilize social media such as Twitter and LinkedIn to research solutions or alternatives. Don’t hesitate to reach out to manufacturers of refrigerants or equipment for further details.

Doing this can prevent panic reactions.


       

Government Affairs Update & Call for Feedback

 

                                                          

 Did you know the apartment industry in Mississippi helps contribute $2.5 billion to our economy? Personal contact between MAA members and legislators is the key to achieving positive change for the apartment industry.  The Government Affairs Committee helps oversee coordination of issues through grassroots efforts and helps bring awareness to local leaders about the importance of apartments in Mississippi. MAA works closely with the National Apartment Association to monitor issues on a federal level, such as fair housing and tax reform. The federal, state and local policy issues impacting the apartment industry are numerous and wide-ranging, and affect how property owners and managers provide safe, affordable housing. Issues can arise at any time.

The MAA Government Affairs Committee held their first meeting in May to discuss several pending issues.  For over two years now, owners in the City of Ridgeland and Pearl have been battling with the mayors over ordinances that may ultimately put apartments out of business and residents on the streets. Ridgeland is seeking to shut down more than 15 apartment complexes, through the enactment of retroactive zoning that outlaws the building densities of many of the complexes or rezones such areas entirely. VanMark, one of 15 complexes in Ridgeland, have filed an appeal to the MS Supreme Court in.  The property is expecting their case to be heard mid-summer and a decision to be ruled by October 2016.

In 2014 the City of Pearl implemented a new ordinance that would require apartment owners to install sprinklers in every unit, and build a storm shelter big enough to house every tenant. A group of 10 rental property owners in Pearl filed a lawsuit against the city, claiming the new ordinance is unconstitutional.  The group had a Preliminary Injunction Motion in December of 2015. As of this month, they are still waiting on a decision from U.S. District Court Judge Henry Wingate on their Motion. The group has also filed our Appellants’ Brief with the Mississippi Supreme Court in their state court appeal.  

The MAA Government Affairs Committee will continue to monitor the issues in Pearl & Ridgeland and keep our members updated. 

We need to hear from you so we may be proactive for our industry. What’s going on in your area that could impact the apartment industry?  Visit www.msaptassoc.org to report an incident.

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