Former Conway police chief named new ADEM director

Former Conway police chief to lead ADEM

The governor announced May 31 that A.J. Gary would take the helm July 1

With more than 35 years in law enforcement and security preparedness, A.J. Gary of Conway will become ADEM director starting July 1, 2016.

Governor Asa Hutchinson announced May 31 A.J. Gary, former chief of police for the Conway Police Department, as the new director of the Arkansas Department of Emergency Management (ADEM). He will replace current Director David Maxwell, who is set to retire at the end of June. Gary’s start date will be July 1, 2016.

“I am pleased to announce A.J. Gary as the next director of the Arkansas Department of Emergency Management,” the governor said in a news release. “His background, knowledge and experience make him an excellent fit for the job. I also want to recognize and thank Director Maxwell for his leadership and service over the years in helping to ensure the safety of all Arkansans. A.J. will be a great addition to an already stellar team, and I am confident our state won’t miss a beat with him at the helm.”

Gary said in the same news release that he is “honored and humbled” to be selected.

“I want to thank David Maxwell for his many years of service to ADEM. I have had the pleasure of working with David over the years and wish him and his family well as he enters retirement. I look forward to working with the team members of ADEM as together we serve the citizens of the State of Arkansas. I am excited about the challenges ahead and look forward to this great opportunity to serve others.”

Gary has worked in law enforcement and security preparedness for more than 35 years. He began his law enforcement career in 1982 with the Conway Arkansas Police Department and graduated from the FBI National Academy in 1990, becoming the first Conway officer selected to attend the academy. He has held positions in all areas of law enforcement, including SWAT, narcotics and criminal investigations.

In 2002, Gary retired from the Conway Police Department after 20 years of service — at the rank of major, patrol division commander — to become chief security administrator for Air Transport International LLC, an international FAA Part 121 air carrier. In 2007, Gary returned to the Conway Police Department as chief of police. He also has been the director of security/compliance for the State of Arkansas, Office of Arkansas Lottery since 2015.

Gary holds a bachelor’s degree in organizational management from Central Baptist College and a master’s in public administration from Arkansas State University. He was appointed to the Criminal Justice Institute Advisory Board in 2011 by Gov. Mike Beebe and reappointed to the board in 2015 by Gov. Hutchinson.

In September 2015, Gary was appointed to the Supreme Court Committee on Security and Emergency Preparedness. He is a member of the FBI National Academy Associates, Police Executive Research Forum and Arkansas Association of Chiefs of Police (AACP). He currently serves as the representative at large of the AACP executive board, the International Association of Chiefs of Police (IACP) State of Arkansas representative and serves on the board of directors for the Arkansas Crises Response Team. He has served on the board of directors for the Cargo Airline Association and Security Committee of the National Air Carriers Association in Washington D.C. In 2005 he assisted on the Business Roundtable Security Task Force Subcommittee on Port and Supply Chain Security.

Gary lives in Conway with his wife, Kim. He has three children and one grandchild.

— Photo and information courtesy of the Arkansas Governor’s Office

75 Counties - One Voice

How about a raise?

The DOL salary threshold increase and its implications for public-sector employers.

Story reprinted with permission from J. Larry Stine

Editor’s note: Since this article was first published, the U.S. Department of Labor has released its final overtime rules. Finalized on May 20, 2016, the rules dictate that full-time salaried employees of county government earning up to $47,476 per year will become eligible for overtime pay. This change becomes effective Dec. 1, 2016. The salary threshold will be updated every three years beginning Jan. 1, 2020.

This article is provided to county government officials for background on the new overtime rules and for advice in preparing to make the changes.

Go to https://www.dol.gov/whd/overtime/final2016/overtimefactsheet.htm to read the new overtime rules. On June 30, 2015, the U.S. Department of Labor (DOL) published a notice of proposed rulemaking (NPRM), which will more than double the current salary threshold for the executive, administrative, and professional (EAP) exemptions to overtime. The proposal is designed to plug a perceived gap that some feel causes many lower-level managers to be unfairly deprived of overtime when they work more than 40 hours. The latest word from DOL is that implementing changes in the regulations will be finalized by July 2016, and will take effect 60 days later, in September 2016. This article will explore what this change will mean for public-sector employees.

Background

Since 1940, there has been a so-called “white collar” exemption to the normal rule that workers must be paid overtime at the rate of one and one-half times their regular rate when they work more than 40 hours in a week. In general, three tests must be met for the exemption to apply: (1) the employee must be paid a predetermined, fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the “salary basis test”); (2) the amount of salary paid must meet or exceed a specified minimum (the “salary level test”); and (3) the employee’s job duties must primarily involve executive, administrative, or professional (EAP) duties as defined by the regulations (the “duties test”).

DOL has proposed to change the salary level requirements substantially — in effect, almost doubling the amount an employee must be paid to satisfy the current “salary level” test. Salary levels have been changed seven times since 1938, most recently in 2004 when the Department of Labor’s Wage and Hour Division (WHD) undertook a wholesale revision of Part 541 of the regulations, but this is the biggest single jump yet.

New Rule

Under the current regulations, to qualify for the exemption an executive, administrative, or professional (EAP) employee must be paid on a salary basis and meet the duties test, and be paid at least $455 per week ($23,660 per year for a full-year worker). The anticipated regulations will set the initial, standard salary level for the EAP exemption at a point equal to the 40th percentile of earnings for full-time salaried workers. Based on the latest statistics available, DOL projects that for 2016, the 40th percentile weekly wage in the final rule will be $970 per week, or $50,440 per year for a full-time worker. In other words, unless an employee is earning more than $50,440 per year, he or she must be treated as an hourly worker and must be paid overtime. (To qualify for a different exemption for highly compensated employees (HCE), an employee will have to earn at least $122,148 per year.)

To prevent the salary levels from becoming outdated, WHD proposes to include in the regulations a mechanism to automatically update the salary and compensation thresholds on an annual basis using either a fixed percentile of wages or the consumer price index for urban consumers (CPI-U). Depending on the nation’s economic performance, this could result in automatic annual pay increases for exempt employees.

Impact on Employers

Raising the minimum salary levels for exempt employees will substantially reduce the number of workers for whom employers must apply the duties test to determine exempt status: no one earning less than the minimum salary level will qualify. Similarly, setting the HCE total annual compensation level at the annualized value of the 90th percentile of weekly wages of all full-time salaried employees ($122,148 per year, based on 2015 statistics) will ensure that the HCE exemption cover only the top 10 percent of earners, employees who almost invariably meet all the other requirements for exemption. Finally, automatic annual updates to the standard salary and compensation are designed to ensure that they maintain their effectiveness.

Methodology

DOL arrived at their estimate for the threshold earnings level by including broad categories of employees, many with high earnings, who are fully exempt from the overtime rules. The proposed rule uses data including employees previously excluded by the Department in 2004. For example, teachers, physicians, lawyers, outside sales employees, and federal employees were excluded from the 2004 sample because they are not subject to the part 541 salary level test. The proposed revision included them, and netted many very high earners. According to the Bureau of Labor Statistics (BLS), in 2012 physicians and surgeons averaged more than $187,000 in annual earnings; the Office of Personnel Management stated that the average earnings for federal employees in 2012 were over $78,000. This makes comparing the 2004 study with the current proposal more difficult. In a rare fit of transparency, DOL admits that its basis for these calculations is not totally ... transparent: “The Department notes that the public will not be able to exactly replicate the weekly earnings and percentiles used in this NPRM from the public-use data files made available by BLS. As with all BLS data, to ensure the confidentiality of survey respondents, data in the public-use files use adjusted weights and therefore minor discrepancies between internal BLS files and public use files exist. BLS publishes quarterly the earnings deciles of full-time salaried workers on which the Department relies to set the proposed salary level at http://www.bls.gov/cps/research_series_earnings_nonhourly_workers.htm.”

Nondiscretionary Bonuses in the Salary Level Requirement

Until now, WHD looked only at actual salary or fee payments made to employees and, with the exception of the highly compensated test, did not include bonus payments of any kind in this calculation. However, several business representatives asked then to include nondiscretionary bonuses and incentive payments as a component of any revised salary level requirement. Such payments are an important component of employee compensation in many industries, and might be curtailed if the standard salary level was increased and employers had to shift compensation from bonuses to salary to satisfy the new standard salary level. The proposed rules provide that in order for an employer to be permitted to credit such compensation toward the weekly salary requirement, the employee will have to receive the bonus payments monthly or more frequently. (WHD was not willing to consider allowing employers to make a yearly catchup payment as they may under the HCE exemption.)

Annual Adjustments (Indexing)

In a bid to avoid inflation-driven “bracket creep,” WHD proposes to establish a mechanism for automatic updates for the standard salary test, as well as the total annual compensation requirement for highly compensated employees. (This is an idea that has been considered for the minimum wage, although never formally proposed.) The Department is considering two alternate methodologies for annually updating the salary and compensation thresholds. One method would be based on a fixed percentile of earnings for full-time salaried workers. The

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other would be based on changes in the CPI-U. Both methods are described in detail in the NPRM.

Duties Test

WHD’s proposal to set the salary threshold at the 40th percentile of weekly earnings of full-time salaried employees is intended to severely limit the need for a duties test by restricting it only to employees who earn more than the increased salary threshold. They believe that the proposed salary level increase, coupled with automatic updates, will address most of the concerns relating to the application of the EAP exemption. A regularly updated salary level will screen out employees who spend significant amounts of time on nonexempt duties and for whom exempt work is not their primary duty. Duties will remain a critical metric of exempt status, but it will be relevant to a much smaller number of employees.

Impact on Employers and Employees

In 2013, there were an estimated 144.2 million wage and salary workers in the United States, of whom DOL estimates that 43 million were salaried employees who may be affected by a change to the Department’s part 541 regulations. Of these workers, DOL estimates that 21.4 million are currently exempt EAP workers under existing rules. DOL projects that their proposed changes, if adopted, would affect an estimated 4.6 million currently exempt workers who earn at least $455/week but less than the 40th earnings percentile ($921). Absent some intervening action by their employers, these employees would become entitled to overtime if the proposed rules take effect. Similarly, an estimated 36,000 currently exempt workers who earn at least $100,000 but less than the 90th earnings percentile ($122,148) per year and who meet the HCE duties test also may become eligible for minimum wage and overtime protection. As the rates are adjusted, more employees will be affected.

In addition to the 21.4 million potentially affected current EAP exempt workers, WHD estimates that an additional 6.3 million salaried white collar workers who do not satisfy the duties test and who currently earn at least $455 per week but less than the proposed salary level will become entitled to overtime because the salary test alone will determine their status, without the need to examine their duties. At the current standard salary threshold, there are 11.6 million salaried workers who fail the standard duties test and are therefore overtime eligible, but earn at least the $455 threshold, while there are only 845,500 salaried workers who pass the standard duties test but earn less than the $455 level. The number of workers who pass the current salary threshold test but not the duties test is nearly 14 times the number of workers who pass the duties test but are paid below the salary threshold. This underscores the large number of overtime-eligible workers for whom employers must perform a duties analysis, and who may be at risk of misclassification as EAP exempt. If the salary threshold is raised to the 40th percentile, WHD estimates that the number of overtime-eligible salaried workers who would earn at least the threshold but do not pass the duties test would be reduced to 5.6 million.

Alternatives

Employers will not be required to raise the pay of all formerly EAP workers to the 40th percentile ($921/ week) to comply with these rules. It is much more likely that employers will shift salaried workers paid less than the new minimum to hourly status, with hourly rates that approximate their former salaries, and control costs by restricting overtime.

Salaried, nonexempt pay will remain a viable option to employers interested in controlling overtime expense in states where the practice is permitted (such as California). This allows an employer to pay a nonexempt employee a guaranteed salary for all hours worked, plus an overtime premium of an additional ½ the regular rate for each overtime hour. This method is desirable where an employer wants to contain costs by discouraging employees from shifting work from regular hours to overtime, since the employee’s effective rate of earnings per hour actually declines the more overtime hours are worked. If either of these methods is adopted, the employer will, of course, be required to make and preserve records of hours worked for these employees.

What about Compensatory Time (Comp Time)?

Unlike private-sector employers, who must always pay cash overtime wages, under certain conditions a public-sector employer may give employees compensatory time off in lieu of overtime wages. Compensatory time off must be awarded at a rate of not less than one and one-half hours for each overtime hour worked, but there are limits on the amount that can be accrued: law enforcement, fire protection, and emergency response personnel and employees engaged in seasonal activities may accrue up to 480 hours of comp time; all other state and local government employees may accrue up to 240 hours.

Many public-sector employers faced with an increase in the number of overtime-eligible employees will find compensatory time an appealing alternative. However, it is important to remember that compensatory time is not budget-neutral: the amount of overtime paid in the form of compensatory time ultimately must be regarded the same as cash overtime because it correlates directly with the employee’s compensation and hours worked.

An employee must be permitted to use compensatory time

“Unlike private-sector employers, who must always pay cash overtime wages, under certain conditions a public-sector employer may give compensatory time off in lieu of overtime wages. ” — J. Larry Stine

Attorney