The Pellucid Perspective - June 2016 - (Page 2)

EMPLOYEE CLASSIFICATION Fair warning to clubs and courses on classifying workers By Jim Dunlap A couple of relatively recent announcements from the Department of Labor (DOL) are forcing golf course and club management to take a hard look at how they are classifying and subsequently compensating staff who work at the facility. Those courses or clubs who choose to ignore the changes or stick their heads firmly in the sand ostrich-style, in hopes that they'll be invisible to the DOL and their compatriots at the IRS, may be asking for trouble. One of the two developments in question is the recent Fair Labor Standards Act revision which basically doubled the wage threshold necessary for an employee to be considered salaried, or "management," and thus exempt from overtime pay for working in excess of 40 hours per week. The other is a set of guidelines issued by the DOL last July regarding the way in which they will determine if someone is an employee or an independent contractor (IC). Both deal with classifications of workers, both are likely to cost golf course or club ownership more money, and both will cause some problems with both the DOL and the IRS if the DOL ever levels its sights on the golf industry. The Fair Labor Standards Act revision raises the annual wage total at which workers are no longer considered hourly workers and thus exempt from overtime pay from just over $23,000 per year to $47,476. That results, in the golf industry's case, in a substantial number of golf course or private club workers who will need to be reclassified and compensated accordingly, depending upon the previous income thresholds in the state where the course or club is located. (In California, for instance, the impact of the higher threshold is relatively minimal, due to the state's higher minimum wage and an annual threshold that is already over $41,000). Last July's new DOL guidelines related to the factors that will be considered by the DOL in determining whether a worker is classified as an employee or an independent contractor will also have some ramifications for golf courses and private clubs. Some typical positions where workers have formerly been treated as ICs include golf or tennis teaching pros, caddies, fitness instructors or even a pastry chef who is brought in by a club on a relatively regular basis to prepare specific dishes. Brad Steele, the National Club Association's VP of government relations and general counsel, outlined six different elements that will now be considered by the DOL in determining whether a worker is an employee or an IC in the Fall 2015 issue of the NCA's Club Director publication. Those considerations include: whether the work performed is an integral part of the club's business; the opportunity for the worker's profit or loss depending on his/her own management skills; the extent of relative investment in each business by the club and the worker; whether work performed requires special skills and initiative; how permanent the relationship is; and the degree of control exercised by the club over the worker. As Steele points out, the "control" factor is no longer the critical decider. In other words, even if the course or club doesn't control when, how or for what compensation a teaching pro or other worker does his or her job, that factor alone doesn't necessarily mean that the individual is an IC. That results, in the golf industry's case, in a substantial number of golf course or private club workers who will need to be reclassified and compensated accordingly, depending upon the previous income thresholds in the state where the course or club is located. 2 The Pellucid PersPecTive June 2016

Table of Contents for the Digital Edition of The Pellucid Perspective - June 2016

TOC
Fair warning to clubs and courses on classifying workers
This SNAG is growing the game, not distracting it
Benchmarking key to industry progress, but needs more components
PGA TOUR leapfrogs golf industry in applying analysis to improve performance
May golf weather impact: Flat nationally; April utilization gains
Minneapolis high on golfers, even higher on courses
Cracking the code on Millennials

The Pellucid Perspective - June 2016