Against the Clock

A s golf courses struggle with attracting players and finding and maintaining employees, the Department of Labor has announced a new rule that could cause further hindrances to the industry.

The final overtime rule, which goes into effect Dec. 1, updates the overtime regulations of the Fair Labor Standards Act. Under the rule, the salary threshold for overtime-exempt workers will increase from $23,660 to $47,476, and will continue to increase every three years based on the 40th percentile of earnings of full-time salaried workers in the South, the United States’ lowest Census region. Employers will have to make a choice to shift currently exempt employees who earn less than $47,476 to nonexempt and pay them overtime for weeks they work more than 40 hours, or give them a raise above the new threshold to keep them exempt from overtime.

Lobbyists representing the golf industry from the Golf Course Superintendents Association of America, the National Club Association, the Club Managers Association of America, the Professional Golfers’ Association and the National Golf Course Owners Association share the position that the final rule will negatively impact the industry, and the Department of Labor should have taken more business and economic factors into account when drafting it. “That increase that the Department of Labor has provided is a 100 percent increase, and it starts six months after the rule was finalized,” says Brad Steele, vice president of government relations and general counsel for the NCA. “That just doesn’t work – in no sense of business does that work.”

Numerous superintendents, golf course operators and industry experts agree that within a few short months, the new rule could begin to jeopardize the job status and security of assistant superintendents and weaken business cost structures. Some say employees will benefit from the rule, often to the detriment of their course. But because every course is different, superintendents will have to draft plans to keep costs low and morale high.

Blind shot

Paul Culclasure, superintendent at the semi-private, 18-hole Kilmarlic Golf Club in Powells Point, N.C., says he didn’t hear about the new rule until a couple months ago. Since then, he has researched it, knowing it will affect his operations. “I have yet to come across the logic behind doing this,” he says.

When President Barack Obama signed a memorandum in 2014 directing the Department of Labor to increase the salary exemption, which was last done in 2004, he hoped to help employees by making more of them eligible for overtime and increased pay.

However, Steele says the rule is considerably damaging to both business operators and their employees. Employers at many golf courses and other businesses will not willingly pay overtime but instead adjust staffing levels, salaries and shift hours – hurting affected employees’ ability to learn, show their worth and grow in their jobs, he says. Some managers and superintendents will cut currently exempt employees who work more than 40 hours per week to 40 hours or below and hire part-time workers to make up the additional work. Others might cut vacation or retirement benefits upon transferring an exempt employee to nonexempt. Additionally, pay changes for non-maintenance workers at some courses and clubs, such as assistant golf professionals and assistant tennis professionals, will impact business operations across the board.

Overall, superintendent reactions to the rule have been mixed, says Chava McKeel, director of government affairs for the GCSAA, who has spoken about it with members of her government affairs committee. “Some people actually were supportive of it, and some weren’t,” she says. “Some said, ‘We’re going to have to lay off some people,’ ‘We’re going to have to hire new people,’ ‘We’re going to have to shift some people down to nonexempt.’ There wasn’t anybody that had a common story, though. So it’s hard to say definitively what the impact is, although there will be an impact.”

At Kilmarlic, exempt employees work long hours during the club’s busy months and have more time off during the winter months, says Bryan Sullivan, director of golf. Those employees have been there for years and seem fine with the way things have been going, he says.

With the new rule, though, superintendents at thousands of seasonal facilities like Kilmarlic will have to figure out how to protect their budget and operations while ensuring employees that job security, pay and benefits will remain largely unchanged. “I think a majority of facilities now are trying to get by with fewer employees but still trying to maintain the same conditions that their guests expect,” Sullivan says. “So when you start putting these types of rulings on us, on golf courses, it’s definitely going to affect some areas of how you run your operation.”

Labor tends to be the highest cost for small businesses, says Melissa Low, senior director of communications and government relations for the CMAA. For golf courses, the rule will impact currently exempt assistant-level employees, including assistant superintendents, who earn below the new minimum salary threshold. The average base salary for an assistant superintendent last year was $41,372, according to the GCSAA’s 2015 Compensation and Benefits Report.

The assistant superintendent at Kilmarlic, Junior Avalos, was promoted from a crew position and put on salary this year, Culclasure says. Although his salary exempts him from overtime he used to receive in the summer, it provides more stability throughout the rest of the year. “I think this time of year he’s missing the hourly, but he did also tell me in December, ‘This is nice. I like that I know what I’m going to get this week no matter what,’” Culclasure says.

If employers respond to the rule by converting assistant superintendents to hourly, it could hurt those assistant superintendents’ morale, despite the possibility of a slight raise, Culclasure says. At the same time, many employers will not be able to afford giving their assistant superintendents significant raises to keep them exempt.

Anthony Benes, superintendent for Old Works Golf Club, a public, 18-hole course in Anaconda, Mont., foresees the rule and resulting costs leading to raised prices for golfers. The majority of the staff at Old Works is seasonal, so the new rule probably won’t heavily influence its business. The club is also managed by Troon, and Benes believes any changes to staffing or operations would be part of a larger, company-wide initiative.

Across the golf industry, assistant superintendents already see relatively stagnant wages, Benes says, and the rule could cause employers to shift them to hourly or give increased responsibility to less-qualified employees. “It’s one of those revolving door positions,” he says. “You might get a little bit better attention with a little bit better wage, but it’s going to have bigger impacts for the property than it will for the people that are in those positions.”

Superintendents in parts of the country such as rural Iowa will themselves be affected by the rule, says Rick Tegtmeier, director of grounds for Des Moines Golf and Country Club, a 36-hole private facility in West Des Moines, Iowa. Many of them have already started looking for loopholes.

At the same time, Tegtmeier feels like some clubs take advantage of assistant superintendents by regularly working them between 50 and 70 hours a week and paying them low salaries. “Having a person get overtime, because if they’re asked to work overtime, I think it’s a big deal,” he says. “I think it helps their morale, helps make them feel that if, ‘Hey, if I have to stay here a little bit longer, at least I’m being compensated for it.’”

On the two courses at Des Moines Golf and Country Club, the first assistant and second assistant superintendent jobs have been paid an hourly rate before Tegtmeier began his position 10 years ago. The assistants work between 100 and 150 hours of overtime a year, spread out between every other weekend.

In Tegtmeier’s view, the rule will generally help the employee, but hurt the employer. “There are a lot of clubs that have a lot of people on salary just to avoid that overtime law, and now they’re going to have to step up to the plate,” he says. “I do think that’s a detriment to the clubs, to the golf courses.”

The duties test

The question of whether an assistant superintendent at a course is exempt depends not only on their pay, but on their individual job duties, Low says. “It’s hard to just by title alone to say, ‘Oh, that person is exempt, or, ‘They are nonexempt,’” she says. “It really comes down to looking at what they actually do, because the assistant superintendent at one course may have a little bit different duties than they have at a different course, and that may preclude them or exclude them from what it is.”

In addition to meeting the salary threshold, an exempt employee must meet a white collar exemption, such as an executive, administrative or professional exemption, Steele says. Assistant superintendents would not likely fall into the administrative exemption because it pertains to office and non-manual work, but the executive or professional exemptions could come into play under the right circumstances.

An employee must meet three requirements for an executive exemption, Steele says. First, the employee must be in charge of a specific department or unit of their business. Second, he or she must direct the work of at least two full-time employees. Third, he or she must have the ability to hire, fire or promote those employees or have “considerable discretion” when those decisions are made.

The professional exemption contains a learned professional category that could apply to assistant superintendents, Steele says. Learned professionals’ primary duty must consist of work that requires advanced knowledge in science or learning that has been acquired at an “intellectual institution,” according to the Department of Labor.

Although duties requirements for exempt employees have not changed with the new rule, now is a good time for employers to look at whether their employees meet them, says Kerri Reisdorff, a shareholder for the labor and employment law firm Ogletree Deakins, which has worked with the GCSAA. Currently, many employees in the United States are classified as exempt when their job duties are considered nonexempt under FLSA rules. If an employee were to file an overtime claim, their employer might not be able to defend their payment practices in court, so employers should consult with lawyers and accountants about how they can comply with the duties test.

Calculating rates

Employers have multiple strategies to choose from when adjusting employee pay, but there is one objective they should share, Reisdorff says. “The overall goal is keeping your labor costs the same, or as close to the same as possible, and then also keeping morale up, which means keeping labor costs as close to the same as you can,” she says. Likewise, employees generally hope for consistency between pay periods.

Employers should calculate the annual value they see by claiming an exemption for someone below the new salary minimum, Reisdorff says. They can do this by dividing the average number of hours they work per week into their weekly salary. If employers are considering raising an employee’s salary to keep them exempt, they should be mindful that the salary threshold is set to increase every three years. Ultimately, if the value of keeping an employee at exempt status is less than the amount it would take to raise that employee above the new threshold – and it often is – then employers might want to allow their workers to be converted to nonexempt.

It’s hard to just by title alone to say, ‘Oh, that person is exempt, or, ‘They are nonexempt.’ It really comes down to looking at what they actually do, because the assistant superintendent at one course may have a little bit different duties than they have at a different course, and that may preclude them or exclude them from what it is.” — Melissa Low, CMAA

When calculating new nonexempt wage levels for assistant superintendents and other currently exempt employees, employers should average the number of hours those employees work throughout the year, Reisdorff says. The average should account for both slow winter hours and busy summer hours, including those that will be adjusted to a time-and-a-half rate.

Employers can also choose to pay seasonal rates, such as a lower rate in the summer and a higher rate in the winter, Reisdorff says. “What you can’t do is fluctuate that rate every week or every month or that sort of thing, because then that would be a fairly clear sign that all you’re doing is trying to avoid paying overtime,” she says. Employers should consult legal help when considering implementing seasonal rates and other changes, in part because states have passed their own FLSA laws that could pose additional restrictions. In Missouri, for example, employers have to give 30 days’ written notice before implementing a wage decrease.

Shotgun start

Superintendents will have to decide how to best adjust to the overtime rule, not only by recognizing the increased salary threshold, but by understanding the duties test, how to keep labor costs fixed and morale high, and knowing who to consult if they need assistance, Reisdorff says.

Fitting into the minority of clubs with a member waiting list, Des Moines Golf and Country Club has always been responsible with its money, Tegtmeier says. He is glad, and he thinks his assistant superintendents are also, that the club pays them hourly.

At Kilmarlic Golf Club, Avalos seems fine with the changes, and Culclasure aims to make the potentially difficult situation into a win-win for both employer and employee. Using a labor tracking program, he will average Avalos’ overtime from this summer and calculate it into a new payment method. “I don’t know if we’re going to go back to hourly or if we’re going to do some sort of base salary so he’s getting a steady paycheck in the winter and then pay overtime,” he says.

Some superintendents have reduced labor costs by chemically controlling pond banks with growth regulators, says Culclasure, who is looking at areas his crew might be able to naturalize or turn into pine straw beds. The club has already switched from walk-behind mowers to triplexes and given course maintenance duties to cart staff employees.

The labor rule just presents one more obstacle for the industry. “Courses are going to have to adapt a little bit with this one,” Culclasure says.

Patrick Williams is a GCI contributing editor.