Thursday, August 11, 2016

See you in court: New overtime rule means more litigation for Georgia employers

With the new overtime rule effective December 1, 2016, more Georgia employers can expect to be facing their employees and former employees in court.

The new rule raises the minimum salary threshold for exemption from overtime pay from the current $455/week to $913/week ($47,476 per year) and automatically increases the threshold every three years based on wage growth over time.

In Georgia, overtime rules are enforced by the Wage and Hour Division of the U.S. Department of Labor. The agency has the authority to order back wage payments and impose fines for employers who violate the law, but the agency is already dealing with a backlog of complaints and the new rule will only add to their burden of cases.

As a result, more employees and former employees will be turning to private employment attorneys to defend their rights in court.

For companies, this will mean spending substantial amount of time in court defending their job classification systems.

As Atlanta television station WXIA-TV recently discovered when reporting on a story involving a local restaurant, the agency is already struggling to enforce the existing law, and the new rule will simply add to their current backlog.

The television station found that since 2000 Georgia companies did not pay 89,766 employees more than $62 million.

While WHD can impose fines, it is highly unusual, as the television reporter found that of the 6,582 Georgia companies cited by USDOL for wage theft, only 8 percent were required to pay a fine.

The new rule will especially impact employees currently classified as first-level supervisors in low-wage industries such as restaurants and retailing where supervisory duties are mixed with directly dealing with customers.

Filing a lawsuit has always been an option under the Fair Labor Standards Act (FLSA), but with the Wage and Hour Division’s failure to keep up with complaints, it is increasingly likely that civil lawsuits will become preferable to waiting months for an investigation.

A successful lawsuit for back wages can run into $100,000's or more, as employers who lose in court will have to immediately pay both back wages and attorney fees for both sides, not to mention any appeals process.

In comparison, normally the Labor Department is satisfied to see back wages paid, sometimes setting up a payment plan where employers can pay in installments until their obligations are met.

With a potential avalanche of lawsuits facing Georgia companies, many of which are small and medium size employers without in-house legal staff, companies may learn that an administrative investigation by the U.S. Department of Labor is preferable to spending hundreds of hours in court and spending thousands of dollars defending their positions.

If you are one of the 89,766 employees or former employees who thinks you may be owed back wages collected by the U.S. Department of Labor's Wage and Hour Division, you can search their database at by the employer's name and submit a claim.

What is the Future of Georgia’s HOPE Scholarships?

The Committee to Preserve HOPE Scholarships has issued a new report saying that in 2018, funds for the general HOPE Scholarships will start to decline.  By 2022, funds for full-tuition Zell Miller Scholarships will exceed HOPE, and by 2028, HOPE could be in the red despite an expanding lottery.

“While the Georgia Lottery remains popular, the lottery proceeds cannot grow as fast as tuition at Georgia colleges and universities, along with other uses such as the state’s Pre-K and HOPE Grant programs,” explained Michael Wald, an independent economic analyst who reviewed the data that supported the report’s conclusions.

The report estimates that annual increases of 7.5% in tuition costs and 6% in Zell Miller Scholars, while expecting a 2.5% increase in lottery funds.

"Despite a tidal wave of cash from the Georgia Lottery, demand for tuition assistance among Georgia families is overtaking the ability to fund the scholarships as intended," according to Chip Lake, President of the Committee to Preserve HOPE Scholarships as reported on WXIA-TV.

The Georgia Student Finance Commission released a statement to 11Alive's Ryan Kruger saying: 

“The Committee to Preserve HOPE Scholarships is a private entity with no affiliation with the Georgia Student Finance Commission (GSFC). We just received this report and look forward to analyzing it over the coming days. As with any long-term projection, it is critical to understand that there are many factors that can impact program costs – tuition, enrollment, etc.”

A 2013 study by David Sjoquist and John Winters on “The Effects of HOPE on Post-Schooling Retention in the Georgia Workforce” listed the objectives of the HOPE Scholarship program as:

• Increasing academic achievement of high school and college students by promoting and rewarding academic excellence.
• Increasing the percentage of high school students who attend college by making college more affordable.
• Increasing the percentage of the “best and brightest” students who stay in-state to go to college.
• Increasing the quality of the workforce, in part by retaining the “best and the brightest” after they graduate from college.

Their study concluded that “HOPE altered the composition of students enrolled in the USG [University System of Georgia] and that the students who enrolled in the USG because of the HOPE Scholarship are less attached to living and working in the state after college than students who would have attended the USG regardless of HOPE. Policymakers should be conscious of post-schooling retention probabilities when making efforts to attract certain students to attend college in their state.”

A 2011 study by James Condon, published in the Journal of Student Financial Aid found that “the HOPE Scholarship Program has been a tremendous asset to the state of Georgia. The program has been so successful that other states have attempted to model their own programs after it.”

If The Committee to Preserve HOPE Scholarships is correct that the HOPE program will run out of money by the time current kindergarten students are ready to enroll in college, the question remains whether the HOPE program has proved its value and should be preserved or be allowed to phase out as funds fail to keep pace with costs?