September

4, 2015

Ms. Mary Zeigler
Director, Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor
Room S3502
200 Constitution Avenue N.W.
Washington, D.C. 20210

Re: Defining and Delimiting the Exemptions of Executive, Administrative,
Professional, Outside Sales and Computer Employees

[RIN 1235AA11]

Dear Director Zeigler:



The National Association of Truck Stop Operators (NATSO) appreciates this
opportunity to provide comments on the Department of Labors (DOLs or the
Departments) proposed revisions to the regulations defining and delimiting the
exemptions from minimum wage and overtime pay for executive, administrative,
professional, outside sales and computer employees (Proposed Rule or the
Proposal).1

The truckstop and travel plaza industry prides itself on providing
competitive compensation and benefits packages to its employees in an
environment that facilitates professional growth and career advancement.
Converting an excessively large number of employees from exempt to nonexempt,
however, can lead to unintended consequences that ultimately harm the very
employees that the Department is seeking to protect. These comments are
intended to assist DOL in understanding how its regulations will affect the truckstop
and travel plaza industry, and assist the Department in updating its overtime rules
without triggering any unintended, undesirable results.

I.
SUMMARY

NATSO opposes any changes to the duties test, which at the present time
accommodates the fact that many upper-level managerial and executive personnel
at truckstops and travel plazas occasionally perform non-exempt duties. No
changes should be made to the duties test without first issuing another notice of
proposed rulemaking that proposes specific revisions to the regulations on which
the public can provide comments.

Although an appropriate salary threshold increase may be warranted, such
an increase should account for regional differences in salaries. These differences are

1 80 Fed. Reg. 38516 (July 6, 2015).

often quite substantial. The proposal does not account for these differences. Thus,
the new salary thresholds would be out of sync with many regional economies
throughout the country. The final rule should account for regional differences in
salaries to provide the desired benefits to employees without undercutting these
employees aspirations to climb the corporate ladder.

The following comments expand upon these issues.

II.
NATSO, Inc.

NATSO is a national trade association representing travel plaza and
truckstop owners and operators. NATSOs mission is to advance the success of
truckstop and travel plaza members.

Since 1960, NATSO has dedicated itself to this mission and the needs of
truckstops, travel plazas, and their suppliers by serving as Americas official source
of information on the diverse industry. NATSO also acts as the voice of the industry
on Capitol Hill and before regulatory agencies.

NATSO currently represents approximately 1,381 travel plazas and
truckstops nationwide, comprised of 1,071 chain locations and 310 independent
locations, owned by approximately 200 corporate entities. Approximately 80
percent of NATSO members facilities are located within one-quarter mile of the
Interstate Highway System, serving interstate travelers exiting the highway and
serving as the home away from home for the nations professional truck drivers.

Efficient and effective operations at truckstops and travel plazas allows
NATSOs members to sell products to the trucking industry and the American public
at lower costs. This makes the costs of traveling less expensive and the lowers the
costs transporting goods by truck, which can serve to make all goods more
affordable.

III. Expanding the Number of Employees Eligible for Overtime Pay Can Lead
to Unintended Consequences that Ultimately Harm the Very Employees
that the Proposal is Designed to Protect

As a preliminary matter, NATSO urges the Department to keep in mind the
practical consequences of converting an excessively large number of employees
from exempt to nonexempt. This mandatory transition can lead to unintended
consequences that ultimately harm the very employees that the Department is
seeking to protect. Indeed, many employees would find the change unwelcome,
causing them to lose many benefits that they currently enjoy as exempt employees.

Specifically, many employees that are currently exempt and paid on a salary
basis will be converted to hourly. This will enable employers to more closely track
and monitor employee hours. This can lead to a decline in employee morale, as this

change is generally considered a loss of status in the workplace. Indeed, employees

often mistakenly (though understandably) believe they are being punished or
demoted, and that the change reflects the employers belief that the employee is not
performing well at work. Further, employees that transition from salary to hourly
will have less flexibility to manage their own schedules, thereby adversely
impacting their work and personal lives.

It can also result in employees experiencing neither an increase in total
compensation nor a decrease in hours worked. Employers will inevitably restrict
the number of overtime hours worked by non-exempt employees, relying on
temporary or part-time staff, or requiring exempt employees to absorb some of
their non-exempt colleagues duties. This can lead to a decline in career-growth
opportunities, as employees today often utilize their freedom to put in the extra
effort when they may otherwise be permitted to leave for the day to acquire
additional knowledge, perform work projects that are above their paygrade, and
garner favor with their superiors. If hours are closely monitored, employees will no
longer be afforded such opportunities.

Additionally, employees will often lose their ability to earn incentive pay,
since the potential for overtime payments will prompt employers to abandon
incentive payment programs. Employers are also likely to lower the wages of
hourly employees in order to maintain payroll budgets this will enable the
employers total annual compensation (including overtime) to remain at the
budgeted level.

These results can harm both employers and employees. The retail business,
particularly fuel retail, is extremely competitive and companies may be unable to
pass along higher labor costs to their customers. In these instances, employers will
inevitably make significant adjustments in the structure of their workplaces to
compensate for the added costs (in the form of increased wages) that the
regulations would impose.

IV.
The Department Should Not Make Any Changes to the Duties Test

A.
The Department should not finalize any changes to the duties
test without issuing another notice of proposed rulemaking
proposing specific revisions to the duties test on which the public
can provide comment.


Although the Proposal does not include specific changes to the duties test, it
notes that the Department is considering whether revisions to the duties tests are
necessary in order to ensure that these tests fully reflect the purpose of the
exemption. The Proposal indicates that DOL is considering requiring overtime-
ineligible employees to spend a specified amount of time performing their primary
duty (e.g., a 50 percent requirement as required under California law), or otherwise
limiting the amount of nonexempt work that exempt employees may perform. The

Proposal does not include specific regulatory text regarding potential changes to the
duties test.


Because the Proposed Rule does not include any specific proposals to revise
the duties test, DOL should not finalize any such revisions without first affording the
public an opportunity to examine and comment upon specific proposed changes. To
finalize changes to the duties test based on the high-level discussion contained in
the Proposal would arguably violate the Administrative Procedure Act.2 It would
also be against the public interest because DOL will not have an adequate
understanding of the affects its final rule would have on the variety of industries
that are subject to its regulations.

B.
The current duties test accommodates the fact that many upper
level managerial and executive personnel at truckstops and
travel plazas occasionally perform non-exempt duties

In the truckstop and travel plaza industry as well as the larger retail sector
upper level employees such as convenience store or restaurant managers will
occasionally help the employees that they oversee stock shelves, cook food, run the
cash register, or perform other physical work in addition to their primary duties
as a manager. These white-collar employees appreciate this flexibility, as it not only
affords them the flexibility to conduct their operations as efficiently as possible to
increase profits, but also enables them to lead by example and demonstrate to
their employees that they can also perform these tasks.

The current duties test recognizes these market realities and accommodates
businesses where white-collar employees have concurrent duties.3 Currently,
exempt employees are permitted to perform duties that are non-exempt in nature
while simultaneously acting in a managerial capacity. Indeed, the nature of
operations at a truckstop is such that it is often engrained in employees view of
their job that everyone from the owner to a lower-level employee pitches in as
needed.

As a general matter, exempt employees with concurrent duties can choose
when they perform nonexempt duties, and are not specifically assigned nonexempt
work by a superior. Exempt employees are invariably hired on the basis of their
exempt-level qualifications and experience; the nature of their work is such that
their output quality and performance reviews are not necessarily associated with
the number of hours worked per day as much as the effectiveness of their

2 See, e.g., Small Refiner Lead Phase-Down Task Force v. U.S. Environmental Protection
Agency, 705 F.2d 506, 549 (D.C. Cir. 1983) (holding that Agency notice must
describe the range of alternatives being considered with reasonable specificity,
otherwise interested parties will be unable to make informed comments, and notice
will not lead to better-informed Agency decisionmaking.)
3 See, e.g., 29 C.F.R. 541.106; see also 541.700(c).

performance. These employees by and large receive higher salaries than

nonexempt workers and have greater opportunities for advancement.

This doesnt change the fact, however, that on any given day circumstances
may require that they spend some of their time performing non-exempt tasks that
are not part of their primary job duty.

Revising the duties test could therefore disrupt one of the most fundamental
attributes of running a successful, efficient truckstop. For example, establishing a
specific amount of time that exempt employees may spend on non-exempt work will
inevitably lead to employers requiring their exempt employees to engage in
burdensome, often demeaning recordkeeping tasks (such as formally tracking their
time) and/or converting them from salary to hourly employees as a defense against
enforcement actions or lawsuits. Firms are understandably reluctant to do this, and
many labor lawyers discourage the practice.4

Revising the duties test would further cause managerial employees to think
twice before stepping in to help their employees, which will cause operations to run
less smoothly and decrease workplace morale. This would likely occur without
employees receiving additional overtime payments or any offsetting benefits.

Revising the duties test could also lead to significantly higher litigation costs.
To illustrate, California has implemented a 50 percent quantitative rule rather than
the qualitative standard that has been the test for the exemption under DOL
regulations for more than sixty years. This California test has resulted in much
higher levels of litigation in that state, as plaintiffs attorneys recognize that
employers have difficulty proving the amount of time that employees spend on
exempt vs. non-exempt work.

Finally, DOL should recognize that the Proposals salary level increase,
coupled with automatic updates to the salary threshold, should address any
concerns that exist with regard to the current duties test. Indeed, salaried
employees that do not automatically qualify for overtime based on the new, more-
than-doubled salary level test will be far more likely to be bona fide white collar or
executive personnel than is the case under current rules.

C.
If the Department finalizes changes to the Duties Test, it should
exercise enforcement discretion to avoid punishing good-faith
efforts to comply


Classification determinations are generally made based upon whether the
employee is paid on a salary basis with a fixed rate of pay, and by their duties and

4 See, e.g., Driggs, Jonathan K. Why I dont like non-exempt salaried arrangements,
Payrollexperts.com, 2012, available at http://www.payrollexperts.net/why-i-
dont-like-non-exempt-salaried-arrangements/.

responsibilities. As a practical matter, classification determinations must be made

by looking at each individual job position. These determinations are challenging for
employers because they are based on both objective criteria and subjective criteria.
They will be made all-the-more challenging if the duties test with which employers
have become familiar is revised. An employer acting in good faith may mistakenly
misclassify employees as exempt when they should be nonexempt, or vice versa.

It is therefore imperative that if the Department finalizes changes to the
duties test, it provide at least eighteen months before such changes become effective
in order to provide employers sufficient opportunity to adjust their operations
accordingly. Additionally, DOL should exercise enforcement discretion to ensure
that it helps employers acting in good faith make appropriate classification
determinations, rather than punishes them.

V.
The Proposed Change to the Salary Threshold Inappropriately Ignores
Salary Differences in Certain Regions of the Country

The Proposal would increase the minimum weekly salary level for exempt
employees by tying it to the 40th percentile of earnings for full-time salaries workers
nationwide, and automatically adjust the minimum salary level on an annual basis
based on inflation. While an appropriate increase in the salary threshold may be
necessary, and an objective salary threshold is undoubtedly a simple,
administratively feasible mechanism to distinguish between exempt and non-
exempt employees, the Proposal is too simple in that it does not acknowledge and
account for salary differences in various regions of the country.

The majority of NATSO members businesses are located in small towns and
rural areas of the country outside of major cities. In these areas, the average salary
is substantially lower than the national average. By setting one uniform minimum
salary level that applies throughout the country, the Proposal disregards significant
regional differences in the level of income needed to achieve a middle class standard
of living.5

The federal government accounts for these regional cost-of-living differences
in establishing its own General Schedule (GS) pay tables for federal employees. It
is arbitrary for the federal government to accommodate these cost-of-living
differences for its own workforce even for jobs that have similar levels of
responsibility and qualification requirements yet ignore them in establishing the
salary level test.

5 Notably, the Departments proposed minimum salary level of $970 per week,
$50,440 per year is higher than the current minimum levels under California and
New York state law, two states with very high costs of living. It is surprising
therefore that DOL is proposing that businesses in rural economies throughout the
country match the same salary levels as those in major metropolitan areas such as
Los Angeles and New York City.


VI.

Nondiscretionary Bonuses


The Department is considering allowing nondiscretionary bonuses and
commissions provided to exempt employees to satisfy up to 10 percent of the salary
level test. NATSO supports this important step, as bonuses based on a companys
financial performance help give employees an ownership stake in the business,
which improves employee performance and morale. The DOLs intention to limit
the credit to bonuses that are paid monthly, however, will often negate the virtues of
this policy shift. Many businesses provide nondiscretionary bonuses quarterly or
annually, and rather than incentivizing businesses to restructure or even eliminate
their bonus program, the final rule should permit bonuses that are paid on such
timelines to satisfy the salary level test.

NATSO further supports raising the amount of the salary level test that
nondiscretionary bonuses can satisfy to 20 percent.6

VII. Conclusion


NATSO appreciates the opportunity to provide these comments, and stands
ready to provide any additional information or assistance to DOL that may be
helpful. Please do not hesitate to contact us.


Sincerely,

_______________________________________
David H. Fialkov
Legislative and Regulatory Counsel
NATSO

6 It is worth noting that additional overtime payments could lead employers to
reduce employees bonuses and equity incentives, thus limiting managerial
employees earning potential and diminishing their personal stake in the success of
the business.