ADOMA presentation July 2016

1. The People Profit Connection
It cost $10,000 on average to replace
an employee
Automotive News reports 70%
turnover is common in dealerships
20,000 Service Tech needed in next 10
year
The average legal cost to defend an
employment lawsuits is $50,000
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2. Workforce Management Drivers
Workforce
Management
Business
Strategy
Compliance
–

3. EEOC Charge – Retaliation
3
$50,000 Settlement

4. Disability Discrimination
4– KPA CONFIDENTIAL –
$50,000 Settlement

5. Retaliation
5– KPA CONFIDENTIAL –
$85,000 Settlement

6. $140,000 Racial Harassment Settlement
6
$140,000 Settlement

7. EEOC Charge – “I am the Dictator”
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$400,000 Settlement

8. $1.5m Discrimination Suit Settlement
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$1.5 Million Settlement

9. Wage and Hour
9– KPA CONFIDENTIAL –
$450,000

10. Flag and Flat Rate Payment Problems
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11. Employee Classification
11–

12. Exempt vs Non Exempt
Exempt employee do not receive overtime.
They are paid for the job they do, not the
hours they work. “Guaranteed salary”.
Non exempt employee must be paid for all
hours worked and depending on the position
and the business of the employer they may be
entitled to overtime. “Hours paid for hours
worked”

13. What Changed
• Exemption from Overtime = $47,476 ($913
per week)
More than $455 but less than $913 will need to be reclassified
• No changes to duties test
• 3 year increases
• Ability to include bonuses, commissions and
incentive payments
– 10% of total compensation for non- highly
compensated employees if the incentive
payments are made at least on a quarterly basis

14. Avoiding Overtime, Fines and Penalties
• Increase salaries (still must meet the duties test)
• Decrease bonuses for those employees whose overall
compensation exceeds the new minimum. Increase salary by
bonus amount
• Reclassify exempt employees as non-exempt and pay hourly.
• Increase staffing levels to eliminate excessive overtime
The BAD news is that all of these option will require most employers
to spend more money on wage payments
The GOOD news is that you will be in compliance and will not be
subject to lawsuits, fines and penalties.

15. Federal Exemptions
MINIMUM WAGE/
OVERTIME/ RECORDS
• Executive
• Administrative
• Professional
– Creative
– Computer Relegated
• Highly Compensated
OVERTIME ONLY
Dealership Specific
• Salesman
• Partsman
• Mechanic
• Commission-paid
The FLSA also has an exemption from the overtime pay
requirements for certain commission employees of a
retail or service establishment. For this exemption to
apply, three requirements must be met: (1) The employee
must be employed by a retail or service establishment;
(2) The employee’s regular rate of pay must exceed one
and one half times the applicable minimum wage; and (3)
more than half of the employee’s total earnings in a
representative period must consist of commissions on
goods and services.

16. Three Factors
1. How is the employee paid?
2. How much is the employee paid?
3. What does the employee do?
• The employee must be paid a salary, must make a
minimum of $913 per week/ $47,476 per year and must
meet all of the qualification of one of the duties test to
be classified as exempt if using the Executive,
Administrative or Professional duties test.
• Highly Compensated employee must perform at least
one exempt duties of an Executive, Administrative or
Professional employee to be exempt.

17. Irrelevant Factors
• Employee is paid a salary- unless meets other
factors for total compensation and duties test
• “We consider employee a manager”
• Employee could supervise someone,
sometimes
• “When employee was hired, we agreed no
overtime would be due”
• “We give them comp time when they work over
40 hours”

18. Wage and Hour Consideration
• You can pay commissions weekly, bi-
weekly, semi-monthly or monthly.
• You must satisfy minimum wage on the
same basis: weekly, bi-weekly, semi-monthly
or monthly
• You can “loan” or advance a sales person
money to cover the minimum wage and then
recoup it in subsequent weeks or months
• You must pay for all hours worked: sales
meetings, off day deliveries, prospecting, etc.

19. Hire, Retain, Engage
-– KPA CONFIDENTIAL –
Engage
Retain
Hire
Select the best because you have a choice
Keep the best with a good working environment
Engage to maximize productivity

20. Eliminate Revolving Door Hiring
20– KPA CONFIDENTIAL –

21. The Five Tools
Effective Application
Behavioral Interview
Reference Checking
Background Checking
Candidate Scorecard
-– KPA CONFIDENTIAL –

22. The Five Habits
Follow a defined process
Use the five tools
Always be recruiting
Include others in the process
Never talk yourself into saying yes
-– KPA CONFIDENTIAL –

23. Satisfied and Engaged Employees
engagement

24. Engaged Employees
Employees align what they want — and what the
business needs— and then take action to achieve both
24– KPA CONFIDENTIAL –
Ownership
Clarity
Action

25. Engaged Managers
Managers understand each employees talents and skills
and match to the businesses objectives — while at the same
time creating personal, trusting relationships
25– KPA CONFIDENTIAL –
Coaching
Relationships
Dialague

26. Engaged Executives
Executives demonstrate consistency in words and
actions, communicate a lot, and align business practices and
behaviors throughout the organization to drive results and
engagement.
26– KPA CONFIDENTIAL –
Trust
Communication
Culture

27. Four Generations At Work
27– KPA CONFIDENTIAL –
Silents (Born between
1925 and 1946)
Baby Boomers (Born
between 1946 and 1964)
Generation Xers (Born
between 1965 and 1980)
Generation Ys or
Millennials (born after
1980)

28. This Doesn’t Work Anymore
Not that it every really did!

29. HR Management Systems
• *Forrester Research
Efficiency
Compliance/
Legal Risk
Communications
Necessity
Only 45% of
employees feel they
receive adequate
information and
communication for
HR and managers
Paper based
communications
results ion 40% error
rate compared to 5%
for electronic
exchanges
50% of HR time is
spent in answering
questions and
transactions
FLSA, FCRA, FMLA,
OSHA, EEO, ADA,
FICA, FUTA, ADEA,
ACA….

30. Dealership Case Study
Issues
• Paper Based Processes,
multiple systems of record
• Inconsistent Application of
Regulatory Requirements/
Company Policy
• Limited access to key
reports/metrics
Key Benefits
• Improved efficiency and
reduction in data errors
• Reduction in legal exposure
and improved employee
relations
• Permission based access and
reporting functionality relieved
signficant reporting burden on
HR
Client Profile- 3 locations, 220 employee

31. Dealership Case Study
Issues
• Limited HR resources
• Multiple system access to key
reports/metrics
• High turnover
Key Benefits
• Effective delivery of basic HR
services allowed internal staff
to focus on strategic issues
including new benefit program
that resulted in cost savings of
$80K
• Permission based access and
reporting functionality relieved
signficant reporting burden on
HR
• Reduced turnover from 57% to
35% in first 18 months. Cost
savings estimated at $113K
Client Profile- 9 locations, 897 employee

32. Effective Workforce Management
Successful
HR
Operations
Documented
Processes
Accurate and
Complete
Employee Files
Effective
Recruiting and
Retention
Performance
Management
Programs
Training and
Communications
Meets All Legal
Requirements
32– KPA CONFIDENTIAL –

33. Key Performance Indicators
• Employee Costs
• Employee
Turnover/Retention
• Absences
• Workplace Compliance
33– KPA CONFIDENTIAL –

34. Questions and Answers
34– KPA CONFIDENTIAL –
QUESTIONS?

35. Contact Information
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Kathryn Carlson
kcarlson@kpaonline.com