Business of Building e-Source - 06/23/2004 (Plain Text Version)

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Show Me the Money: New Overtime Pay Rules

If you’ve heard about the new overtime pay rules issued by the U.S. Department of Labor (DOL), you’re probably wondering how they affect your business.

The regulations were issued this April under the Fair Labor Standards Act and will go into effect on August 23, 2004. Here’s a summary of the most significant changes:

Definitions (or duties tests) have been revised for determining whether or not white-collar positions (executive, administrative, professional, outside sales, and computer employees) can be classified as exempt from overtime pay. The duties tests are too detailed to list in this article, but are available on the DOL's FairPay Web site under “Fact Sheets.”
Minimum salaries for exempt white-collar employees have increased. To be classified as exempt from overtime pay, they must receive a minimum salary of at least $455 a week or $23,660 a year. Under the old rules, exempt employees had to be paid a minimum of $155 a week or $8,060 annually.
There’s a new classification for “highly compensated” employees (those that earn at least $100,000). They are exempt from overtime pay if they customarily and regularly perform at least one of the duties of an exempt executive, administrative, or professional employee identified in the standard exemption tests on the DOL’s Web site.

What Doesn’t Change

“Outside sales” employees are not affected by the revised minimum salary requirements. They can still be paid on commission without a guaranteed salary as long as their duties and work location meet the revised outside sales exemption test requirements found on the DOL’s Web site.

Non-management employees in production, construction, and similar occupations like carpenters, electricians, plumbers, and laborers are classified as blue-collar workers and are entitled to overtime pay. They are not exempt under the new regulations no matter how skilled they are or how much they earn. “They could possibly qualify for the highly compensated employee exemption,” says David Crump, director of NAHB’s Legal Research Program, “but that’s not very likely.”

Crump offers some tips for classifying superintendents and project managers, who seem to straddle the blue-collar/white-collar line:

To qualify for overtime pay exemption under the new regulations, these employees must meet salary and duties tests under the executive or the highly compensated employee classifications.
Required duties for the executive exemption include the power to hire and fire employees or at least weigh in on recommendations about hiring, firing, promotion, or advancement.
The administrative exemption involves office or non-manual work directly related to management or general business operations—a description that normally would not fit a superintendent or project manager with site-specific responsibilities.

What Does This Mean for Your Business?

“I don’t think [the new overtime pay regulations] will have much impact on the average home builder,” says Bob Whitten, vice president of SMA Consulting in Colton, CA, and a member of NAHB’s Single Family Small Volume Builder Committee. “Administrative staff earning less than $23,660 a year are usually paid by the hour and rarely get more than 40 hours per week. Most field labor is contracted, so there is minimal impact there.”

Whitten is right that the regulations probably won’t affect a sea change in home builders’ and remodelers’ operations. However, you should take the following steps recommended by CCH, Inc.’s Health and Human Resources Group to manage payroll costs and make sure you’re in compliance with the new overtime pay regulations:

Identify employees who learn less than $23,660. Evaluate whether payroll costs will best be controlled by raising their salaries to retain their exempt status (provided they still meet the duties tests for their positions), or budgeting for overtime pay.

Conduct job analyses. Determine which employees perform administrative, professional, and executive duties as defined by the revised duties tests.

Crump points out that the definitions for administrative employee exemption have changed to “more of a position of responsibility.” It’s important to familiarize yourself with the duties tests and, if necessary, ask your lawyer for help in interpreting them. You can also call the DOL’s toll-free Wage and Hour help line Monday through Friday 8 a.m. to 5 p.m. at 1-866-487-9243, or use the online form to ask questions.

“Employers have to be careful of classifications, which they did under the old rules,” says Lucy Katz, vice president of customer service and client development for Austin, TX-based Katz Builders, and a member of NAHB’s Single Family Small Volume Builders Committee. You need to make sure the classification meets the job description. That’s why it’s so important to have written job descriptions.”

Revise job descriptions. After you perform job analyses, revise job descriptions accordingly. Make sure the descriptions truly reflect the work performed and skills required.

Work closely with payroll. Make sure your payroll system is updated to accurately reflect exempt and non-exempt classifications, and that overtime is paid accordingly.

Develop a communications strategy. Some employees may shift from exempt to non-exempt status under the revised rules. They may be happy about the prospect of earning overtime pay, or they may simply feel demoted. You have some pretty sensitive information to give them, so choose your words well. Be sure to communicate to all of your employees how valuable they are to your company.

One More Thing…

Learn about local laws. Some states have enacted overtime pay laws. When an employee is subject to both the state and overtime laws, he or she is entitled to overtime pay according to the higher standard (that is, rate of pay). The DOL’s Web site includes a map that details minimum wage and overtime pay requirements for specific states.

Whether you’re writing job descriptions for the first time or are revising your current ones, get a copy of Job Descriptions for the Home Building Industry, Third Edition. It contains 40 job descriptions for home building industry employees, plus sample company organization charts, job description forms, electronic documents on CD, and other tools. Order it from BuilderBooks.com by calling 800-223-2665 or select this link to order it online.

Three More States Adopt NOR Laws

In the last two months, governors in Georgia, Mississippi, and Hawaii authorized Notice and Opportunity to Repair laws in their states. The laws create a process that asks home owners to give builders a chance to fix construction defects before they are brought into a lawsuit.

The Georgia legislation was advocated in conjunction with a builder licensing bill, which also passed this session. Mississippi's Notice and Opportunity to Repair language was included in a revision to the state's home warranty act. The Hawaii law was made official just last week after Governor Linda Engle put her signature on it. All three laws are similar to laws on the books in more than 20 other states.

In related news, home builders in Louisiana successfully pushed for legislation to amend the state's New Home Warranty Act to reduce the warranty period for major structural defects in homes from seven to five years.

These laws are critical steps in making general liability insurance more affordable and readily available for builders while still protecting the rights of consumers.

Of the 20-plus states with Notice and Opportunity to Repair laws already on the books, several, including Alaska, Arizona, Florida, and Washington, amended and strengthened their existing laws in 2004.

For information on a specific bill or law, contact your state lobbyist. For answers to general questions on Notice and Opportunity to Repair legislation, contact Sam Leyvas at 800-368-5242 x8326. [return to top]

Fill Out the Survey Coming Your Way

More than 50,000 NAHB members will receive a “call to action” on general liability insurance (GLI) via a special survey mailing. The survey is part of a GLI initiative to get an accurate national picture of the loss experiences of the residential construction industry and to develop new GLI products exclusively for the NAHB membership.

“NAHB members who receive the mailing should sit down and complete the survey and provide the materials needed to make this project a success,” said NAHB President Bobby Rayburn. “With insurance costs rising and exemptions making coverage less effective, it’s in everyone’s interest to participate in this effort.”

NAHB is partnering with Marsh, a global insurance and consulting firm, to develop new GLI products that will meet members’ needs. Marsh and NAHB are working on a timetable that would bring new GLI products to the market by January 2005.

Elements of the mailing, which are also available online at www.nahb.org/gli, include insurance surveys—one version for builders/remodelers and another for trade contractors—plus a model consent letter authorizing insurance providers to supply crucial background information for this effort. The mailing is also going to NAHB-member insurance agents, who will play an important role in the GLI initiative.

For more information about the GLI initiative, go to www.nahb.org/gli or contact Clayton Traylor at 800-368-5242 x8490 or Blake Smith at 800-368-5242 x8583. [return to top]

Online Business Management Tools for NAHB Members

Go to www.nahb.org/biztools to access hundreds of time-saving, money-making, and cost-cutting resources for building a better business. There's information on everything from accounting to sales and marketing, construction management, and customer service—to name just a few. You can even participate in business strategy discussion forums and find out how to use certain software in the Talk About Business and IT area. Check out this important member resource today. [return to top]

Pass it On

You probably know someone who wants to read this valuable newsletter, too. So go ahead and send this newsletter to any NAHB members you know who might benefit from it. They’ll be sure to thank you for it! [return to top]

How Does Your Business Measure Up?

Get your copy of the 2004 Cost of Doing Business Study and you’ll instantly see how your financial performance stacks up against the rest of the industry. The publication gives home builders a rare glimpse at other builders’ books by providing data about profitability, cost of sales, and expenses from hundreds of home builders across the country.

In this 2004 edition, you’ll learn how to develop cost control systems and get tips on cutting cycle time. Start working more profitably by ordering it today! [return to top]

Build Your Knowledge at the Custom Builder Symposium

Each year, custom home clients raise the bar on what they expect of your business and those one-of-a-kind homes you build. Likewise, you’ve got to keep expanding your knowledge base to deliver on their expectations and ensure your profitability. Get the skills you need at the 2004 Custom Builder Symposium, the only event offering world-class education, exceptional networking opportunities, and fun-filled activities for custom home builders.

“Beyond the Tool Belt” is the theme of this year’s Symposium, which will be held November 12 – 14 at the Renaissance Esmeralda Resort and Spa in Indian Wells, California. Here’s what’s new for 2004:

Keynote speaker Bryan Williams of The Ritz-Carlton will share the organization’s best practices and explain how to create a culture of service excellence.
Certified Graduate Builder (CGB) Designation Courses will be offered during the Symposium at no additional charge. The courses also are approved for Certified Graduate Remodeler (CGR) credit.
Daily roundtables will give you the opportunity to discuss hot topics and solutions to business challenges with other custom builders.
The first ever Symposium Golf Tournament will be held at the challenging Ted Robinson designed course located right at the resort.

When you’re ready to take a break from learning and networking, you can unwind in the resort’s full-service spa and fitness center; explore Palm Springs via horseback riding tours of nearby Indian Canyons or by hot air balloon over the Santa Rosa and San Jacinto Mountains; and view the area’s most innovative custom homes along the Andersen Home Tour.

Put the 2004 Custom Builder Symposium on your calendar whether you’re thinking of getting into the custom home building business, or you’re already a seasoned builder, remodeler, general contractor, architect, sales professional, or marketing professional, or you want to sell products and services to these professionals.

Register today to guarantee your spot and you’ll save up to $50 with the early-bird discount. Go to www.nahb.org/custom to register for the Symposium or receive more information. Questions? Need more information? Contact the NAHB University of Housing’s office of the registrar at 800-368-5242 x8338, or at registrar@nahb.com. [return to top]

Business Opportunities From NAHB Councils and Departments

It pays to be diversified. Publicize your company’s depth by entering the following award programs and registering for NAHB International’s upcoming conference in Mexico City.

Best in American Living Awards

Co-sponsored by Professional Builder magazine and NAHB, the annual Best in American Living Awards recognize builders, developers, architects, land planners, designers, and other industry professionals who produce homes that illustrate design quality and success in the marketplace and exemplify the best in American living.

The registration deadline for the awards is July 1; entries are due by July 15.

Select this link for additional information and to download an entry form. Questions? Contact Professional Builder’s Judy Brociek at 630-288-8184 or Colleen Paez at 630-288-8168, or NAHB’s Michelle Persinger Matuga at 800-368-5242 x8343.

2005 Commercial Builders Council Awards of Excellence

Sponsored by NAHB’s National Commercial Builders Council, the 2005 Awards of Excellence — Building Excitement program recognizes achievements in the national commercial building industry for design (remodeling and new construction), market appeal, energy efficiency, challenges faced during building, and overall success of the project. Builders, architects, designers, engineers, contractors, developers and building owners are eligible to enter the competition.

All entries must be received by July 26. Select this link to download the call for entries brochure and entry form. For more information, contact Carmel Nayman at 800-368-5242 x8410.

Sales and Marketing Ideas Magazine’s Idea of the Year Contest

What’s your bright idea? If you’ve produced an innovative, cost-effective marketing campaign or strategy, enter Sales & Marketing Ideas magazine’s Idea of the Year contest. The entry deadline is August 6; entries must feature ideas generated from July 1, 2003 to July 1, 2004. Select this link to download an entry form. Questions? Contact Taylor Blanchard at 800-368-5242 x8680.

Remodelor^TM of the Year Award

Applications for the Remodelor™ of the Year Award are now available online at www.nahb.org/remodelors under the Awards section.

Sponsored by NAHB’s Remodelors™ Council, The Remodelor™ of the Year Award recognizes exemplary NAHB involvement at any level, superior business management, and an outstanding contribution to the remodeling industry. Councils should nominate individual remodelers, but the nominee must write his or her own entry essay.

The entry deadline is September 3. The winner will be announced at the Remodelors™ Council Gala during the 2004 Remodeling Show in Chicago. Questions? Contact Melanie Hinton at 800-368-5242 x8451.

Building Systems Councils Excellence in Marketing & Home Design Awards

NAHB’s Building Systems Councils (BSC) are accepting entries for the annual BSC Excellence in Marketing & Home Design Awards. Categories for systems-built housing manufacturers and associates are open only to current BSC members; builder categories are open to any NAHB builder member using building systems. The Building Systems Councils represents the interests of the concrete, log, modular, and panelized home building industries.

All entries must be received by September 10. Winners will be recognized during the Building Systems Councils SHOWCASE in Austin, TX. Select this link for more information about the competition, or contact Eric Fulton at 800-368-5242 x8577.

National Sales and Marketing Awards

Sponsored by NAHB’s National Sales and Marketing Council, the National Sales and Marketing Awards recognize excellence in new-home sales and marketing. The awards are held each year at the International Builders’ Show, and pay tribute to the best in architectural achievement, design, advertising and promotion, interior merchandising, Web site design, and more. The call for entries opens July 1; the entry deadline is September 24.

Select this link for more information and a listing of last year’s award winners. Questions? Contact Taylor Blanchard at 800-368-5242 x8680.

2005 Best of Seniors Housing Design and Marketing Awards

The NAHB Seniors Housing Council has revamped its seniors housing awards program with 108 categories and an increased emphasis on marketing. The 2005 Best of Seniors Housing design and marketing awards program, “Celebrating Excellence … Visions of the Future,” rewards projects for their innovative designs and marketing approaches.

The contest is open to architects, builders, remodelers, engineers, and other professionals who produce or sell housing for the 50+ market. The entry deadline is October 22. Awards will be presented during the 2005 International Builders’ Show in Orlando, FL.

Select this link to download contest rules and the call for entries. Or contact Eucklan Matthews at 800-368-5242 x8220 to have a copy of the call for entries mailed to you.

Do Business in Mexico

The Mexican home building market is expected to grow to a value of $6.7 billion by 2005. Want a piece of it? Attend the 2nd International Housing Conference of the Americas, which takes place November 7-10 in Mexico City and is sponsored by NAHB International.

Conference highlights include pre-arranged, one-on-one networking meetings between U.S. and Mexican company representatives, property tours of Mexico’s top builders, and interactive, highly informative panels. Simultaneous English/Spanish translation is included for all sessions.

The first 200 registrants to the 2nd International Housing Conference of the Americas will receive complimentary registration to the 2005 International Builders' Show in Orlando, FL.

Select this link to register online for the conference. For more information, contact Matt Monjan at 800-368-5242 x8419. [return to top]

Did Someone Forward This to You?

To get this valuable newsletter every month, just go to:
http://www.magnetmail.net/actions/nahb_newsletter_subscription.cfm?user_id=mmbl. [return to top]

Member Advantage: NAHB Members Can Get One Month Free From Williams Scotsman

Williams Scotsman offers a full line of temporary-space products and accessories, including sales office and centers, construction trailers, mobile offices, and storage products. Floor plans and specifications are available.

With 90 locations in North America and more than 50 years of experience, Williams Scotsman has a money-saving plan specifically designed for NAHB members—with up to one month's free rent. When you sign up, your seventh month is FREE—a maximum value of $500.

For more information, call 877-884-3068 today and be sure to identify yourself as an NAHB member. Or visit www.willscot.com.

For the most up-to-date details on the Member Advantage discount program and all of the participating companies, go to http://memberadvantage.nahb.org.

Or visit www.nahb.org to explore the full range of benefits associated with membership in your local, state, and national home builders associations. [return to top]