DOL quietly drops big news on new overtime rules

The DOL’s been pretty quiet about what it’s doing behind the scenes about changing the overtime exemption rules and salary threshold. But it has finally spoken. 

This week, at the American Bar Association’s Labor and Employment Law conference in Philadelphia, the Solicitor of Labor M. Patricia Smith shared some insider info that elicited “gasps” from the audience, according to a report by The Wall Street Journal.

Smith said during a panel discussion that the finalized changes to the FLSA’s overtime eligibility rules likely won’t be issued until late 2016. From that juicy piece of info, one could surmise that they won’t take effect until 2017.

This is huge news for the business community, which hasn’t been shy about expressing outrage over the proposed overtime rule changes the DOL issued this summer. The delay means employers have more time to prepare, even though they don’t know what the finalized rules will look like yet.

The period during which the public can comment on the proposed rules ended Sept. 4, and the DOL received roughly 270,000 comments during that period. That’s about three times the amount of comments the agency received when it last updated the overtime rules back in 2004. About 50,000 comments came in during the last week alone.

But despite that last-minute outpouring of commentary, the DOL announced it wouldn’t extend the comment period. It said the standard 60-day comment period — combined with its outreach efforts prior to the proposal being published — was enough to “produce a quality regulation.”

So all signs pointed to the final rules being issued sometime in early 2016. But Smith cited the amount of comments it received and the complexity of the law as the two main reasons the agency’s looking at a later date for releasing the rules.

What we do know

While the DOL’s been mum on whether or not it’ll make significant changes to its proposed rules, we do know a few things for certain about what’ll be in the final rules.

For starters:

  • The minimum salary threshold will rise … significantly. The current threshold a worker must hit to be overtime-exempt is $23,660. The proposed rules seek an increase to $50,440. And while it may not climb quite that high, it will climb — likely to at least $40,000 or so.
  • The threshold will automatically increase. For the first time ever, the salary threshold will be tied to an automatic-escalator, so it can keep pace with inflation — and so major legislative changes aren’t needed every time lawmakers want it to increase.
  • The DOL is looking at making changes to the duties tests. The DOL hasn’t suggested changing the executive, administrative, professional, computer or outside sales duties tests (see them here) yet. But the agency did specifically ask for comments on whether the tests should be changed and whether they’re working to screen out employees who are not bona fide white collar exempt employees.

The X factor

There is one X factor in all of this that no one has mentioned yet: the effect the upcoming presidential election will have on the rulemaking process.

Originally, the DOL had set a tentative deadline of November 2014 for issuing the proposed rules. Then, they didn’t come out until more than six months after that soft deadline had passed.

Then, it was expected the finalized rules would be issued sometime in early 2016. Now, that’s clearly not what’s going to happen. All of these delays have butted the rulemaking process right up against the presidential election.

This begs the question: Would the Obama administration really issue a highly controversial set of finalized rules just prior to the election?

After all, business groups, employers and even a former DOL administrator (who oversaw the last rule changes) have staunchly opposed the proposed rule changes, saying they’ll stifle companies’ ability to operate, drive prices up and/or actually hurt the very people the rules are trying to help. This could potentially give the GOP more ammunition to use on the campaign battlefield.

On the other hand, if public opinion polls reveal that the rule changes are something the voting public wants and views as beneficial, the Democrats may try to push the final rules through prior to the election to give their political campaigns a shot in the arm.

Time will tell which scenario will play out — but a lot of it likely depends on how Democrats feel the voting public will react to the rule changes once they’re finalized.

One final thing to consider: Since the entire rulemaking effort was spurred by the Obama administration, and heavily backed by Democrats, it’s entirely possible any finalized rule changes will be repealed should a Republican win the White House next fall.

‘Cadillac’ tax delayed: What it means for HR pros

Employers got an early Christmas present when President Obama signed a budget bill that delayed the implementation of the Affordable Care Act’s tax on high-value or “Cadillac” health plans. 

How long is the delay? The 40% excise tax on high-value health plans (individual plans with premiums that exceed $10,200 and family plans with premiums exceeding $27,500) is now slated to kick in Jan. 1, 2020. It was originally scheduled to kick in two years earlier — Jan. 1, 2018.

Did the bill change the tax? Yes. The tax will now be deductible. So any amounts employers/plan sponsors end up paying toward the tax will be tax-deductible expenses. Also, the budget bill, which will fund the government through fiscal year 2016, calls for the U.S. comptroller general and the National Association of Insurance Commissioners to study whether the ACA uses “suitable” age and gender benchmarks to determine the “Cadillac” tax thresholds. So more changes could be on the way.

Did the bill alter the ACA in any other ways? Yes. It did so in two ways:

  • It suspends the tax on medical devices for two years. The ACA requires medical device manufacturers to pay a 2.3% excise tax on all medical devices they sell. It took effect in 2013. The budget bill suspends the tax for two years, so it’ll kick back in on Jan. 1, 2018.
  • It imposes a moratorium for one year on the collection of the ACA’s annual health insurance provider fee, which took effect in 2014. The fee will kick back in Jan. 1, 2017.

Did the bill push the “Cadillac” tax closer to death? Yes. For a while now, the Obama administration has been adamant that it would oppose or veto any legislation that would delay, weaken or kill the “Cadillac” tax. So what changed? Legislation to repeal the tax has been getting overwhelming support from both sides of the aisle in Congress. That, combined with pressure to get a budget deal passed by year-end — a deal Republicans insisted include some alteration of the tax — forced President Obama’s hand to delay the tax. The delay now gives opponents of the tax more time to either alter the tax or get it repealed altogether. Its fate will now will likely be left up to the next president and Congress.

Auto-termination policy was illegal, but employer’s actions weren’t: Court

Companies with automatic termination policies, policies that automatically terminate employees after they exceed a certain amount of leave time, have come under fire in recent years.  

Reason: Under the ADA, employers must engage in the “interactive process” to see if the employee on leave can still do his or her old job with some type of reasonable accommodation — and additional leave time may be considered a reasonable accommodation.

Salem v. Houston Methodist Hospital is a recent court case that centered around the idea of an automatic termination policy.

Here’s some background: Fatima Salem worked as a nurse and suffered from a number of medical and psychological conditions. Salem’s medical issues led to her requesting and getting approved for a 59-day leave of absence that was covered by the FMLA. Following her return from that leave, Salem took another leave of absence.

Then the problems occurred. According to Houston Methodist’s leave policy:

“[a]ll leaves of absence of any kind when combined cannot exceed six (6) months in any rolling twelve (12) month period, measured backward from the date the leave begins.”

Salem had asked her employer to make an exception to the auto-termination leave policy when she discovered she wouldn’t be able to return within the six-month time frame. However, Salem was unable to provide the company with any type of estimate as to when she’d be able to return to work. Because of the company policy and the fact no estimate of a return date was given, Houston Methodist denied the request and fired Salem.

EEOC takes over

Salem’s first move was to file a charge with the EEOC, claiming Houston violated the ADA by refusing to grant her leave request. The EEOC determined that Houston’s policy violated the ADA …

“… in that it deprives certain employees of a reasonable accommodation, dispenses with respondent’s obligation to engage in an appropriate interactive process and impermissibly relieves [the Hospital] of its burden to establish undue hardship as a defense to a request for a reasonable accommodation that would extend a leave beyond six months.”

Despite its stance on the leave policy, the EEOC was unable to conclude that Houston violated the ADA by terminating Salem. According to the agency, simply having a policy that violated the ADA wasn’t enough to prove that Salem’s ADA rights had actually been violated.

So then Salem took up her case against Houston with a district court. Her suit claimed that, among other things, Houston failed to accommodate her disability by not providing additional unpaid leave and retaliated against her request, which violated the ADA.

Houston Methodist fought to get the suit dismissed.

What the court said

In an unexpected turn of events, the court granted summary judgment for the company on all of Salem’s claims.

Although the court acknowledged that Houston only engaged in “minimal participation” of the interactive process with Salem, it didn’t change the end result: There was no evidence the reasonable accommodation Salem requested was a feasible reasonable accommodation for the company to make.

Without any evidence the extra leave time was a “feasible” accommodation for the company to make, the court was able to dismiss the failure-to-accommodate claim. And because Salem couldn’t prove that enforcing a six-month leave limit was a retaliatory action, that claim was dismissed as well.

Are auto-termination policies OK?

A pro-employer ruling in an ADA leave case is always welcome news for HR pros, but the company here actually was very lucky to end up in the position it did.

Reason: The EEOC found the hospital’s leave policy unlawful, and the court that ruled in the hospital’s favor did criticize its engagement in the interactive process.

What saved the company here was the fact that, by not providing an estimation of a return date, Salem was essentially asking for indefinite — not extended — leave as her accommodation. A number of courts have ruled that indefinite leave is not a reasonable accommodation under the ADA. Had she been able to provide a return date, this case could have turned out a lot differently.

To avoid leaving to anything to chance, employers should always fully engage in the interactive process whenever an employee requests additional leave as an ADA accommodation.

DOL quietly drops big news on new overtime rules

The DOL’s been pretty quiet about what it’s doing behind the scenes about changing the overtime exemption rules and salary threshold. But it has finally spoken. 

This week, at the American Bar Association’s Labor and Employment Law conference in Philadelphia, the Solicitor of Labor M. Patricia Smith shared some insider info that elicited “gasps” from the audience, according to a report by The Wall Street Journal.

Smith said during a panel discussion that the finalized changes to the FLSA’s overtime eligibility rules likely won’t be issued until late 2016. From that juicy piece of info, one could surmise that they won’t take effect until 2017.

This is huge news for the business community, which hasn’t been shy about expressing outrage over the proposed overtime rule changes the DOL issued this summer. The delay means employers have more time to prepare, even though they don’t know what the finalized rules will look like yet.

The period during which the public can comment on the proposed rules ended Sept. 4, and the DOL received roughly 270,000 comments during that period. That’s about three times the amount of comments the agency received when it last updated the overtime rules back in 2004. About 50,000 comments came in during the last week alone.

But despite that last-minute outpouring of commentary, the DOL announced it wouldn’t extend the comment period. It said the standard 60-day comment period — combined with its outreach efforts prior to the proposal being published — was enough to “produce a quality regulation.”

So all signs pointed to the final rules being issued sometime in early 2016. But Smith cited the amount of comments it received and the complexity of the law as the two main reasons the agency’s looking at a later date for releasing the rules.

What we do know

While the DOL’s been mum on whether or not it’ll make significant changes to its proposed rules, we do know a few things for certain about what’ll be in the final rules.

For starters:

  • The minimum salary threshold will rise … significantly. The current threshold a worker must hit to be overtime-exempt is $23,660. The proposed rules seek an increase to $50,440. And while it may not climb quite that high, it will climb — likely to at least $40,000 or so.
  • The threshold will automatically increase. For the first time ever, the salary threshold will be tied to an automatic-escalator, so it can keep pace with inflation — and so major legislative changes aren’t needed every time lawmakers want it to increase.
  • The DOL is looking at making changes to the duties tests. The DOL hasn’t suggested changing the executive, administrative, professional, computer or outside sales duties tests (see them here) yet. But the agency did specifically ask for comments on whether the tests should be changed and whether they’re working to screen out employees who are not bona fide white collar exempt employees.

The X factor

There is one X factor in all of this that no one has mentioned yet: the effect the upcoming presidential election will have on the rulemaking process.

Originally, the DOL had set a tentative deadline of November 2014 for issuing the proposed rules. Then, they didn’t come out until more than six months after that soft deadline had passed.

Then, it was expected the finalized rules would be issued sometime in early 2016. Now, that’s clearly not what’s going to happen. All of these delays have butted the rulemaking process right up against the presidential election.

This begs the question: Would the Obama administration really issue a highly controversial set of finalized rules just prior to the election?

After all, business groups, employers and even a former DOL administrator (who oversaw the last rule changes) have staunchly opposed the proposed rule changes, saying they’ll stifle companies’ ability to operate, drive prices up and/or actually hurt the very people the rules are trying to help. This could potentially give the GOP more ammunition to use on the campaign battlefield.

On the other hand, if public opinion polls reveal that the rule changes are something the voting public wants and views as beneficial, the Democrats may try to push the final rules through prior to the election to give their political campaigns a shot in the arm.

Time will tell which scenario will play out — but a lot of it likely depends on how Democrats feel the voting public will react to the rule changes once they’re finalized.

One final thing to consider: Since the entire rulemaking effort was spurred by the Obama administration, and heavily backed by Democrats, it’s entirely possible any finalized rule changes will be repealed should a Republican win the White House next fall.

OT lawsuits: When signed time sheets aren’t enough to protect you

When is asking employees to sign off on their time sheets before they’re submitted to Payroll for processing not enough to protect you from an overtime lawsuit? When this happens. 

Here’s when you can get nailed: A manager knows or should’ve known that an employee worked more hours than he or she claimed to have worked.

A recent lawsuit shows just how hard it can be to defeat employees’ claims that they weren’t paid proper overtime.

Never spoke up

Meet Jose Garcia and Raymond Sutton, two employees for SAR Food of Ohio, which runs several Japanese restaurants — under the names Sarku Japan and Sakkio Japan — that are located in shopping center food courts.

Both workers sued SAR. They claimed that despite their initial acknowledgement/certification that the work hours they were paid for were correct, they actually weren’t paid for all the time they’d worked.

SAR posted employees’ work schedules at the beginning of every work week. Often times, the schedules called for employees to work more than 40 hours in a week — and there was no dispute that when employees’ schedules and subsequent payroll submissions indicated that they’d worked overtime, they were paid for the time indicated.

But Garcia and Sutton claimed they frequently worked beyond their scheduled shifts and didn’t claim the additional hours on the payroll submissions. Garcia and Sutton gave several reasons for not claiming the additional hours — including not wanting “to seem petty,” feeling “intimidated” and not thinking it was worth pointing it out.

‘But our managers knew’

The court, however, appeared to give little weight to the flimsy reasons Garcia and Sutton gave for not speaking up about their hours.

Instead, it decided to focus on a bigger fish: The fact that their managers may have known they were working undocumented hours.

Garcia and Sutton painted a picture in which it appeared as though they worked side-by-side with their managers, and their managers had a pretty good idea of the true hours the pair worked.

SAR moved for summary judgment in an attempt to get the workers’ lawsuit thrown out. It said that they were given multiple opportunities to inform management that their time sheets were inaccurate and claim the additional work hours (again, there was no despite that SAR paid employees for all the hours they claimed).

On top of that, SAR pointed out that every paystub issued to the workers said “Any questions concerning your pay, please call … Sarku Japan Payroll Department.”

But in the end the court said that didn’t matter.

‘What would a jury say?’

The court said the plaintiffs’ testimony presented evidence that “could allow a reasonable jury to conclude that the store supervisors were aware that Plaintiffs were working after their scheduled shifts, but nonetheless knowingly submitted time sheets indicating that no such work occurred.”

Bottom line: The lawsuit was allowed to proceed.

But what about Garcia and Sutton, weren’t they culpable for failing to point out the unpaid hours? Not if management knew they weren’t paid for time they’d put in, according to the court.

The reason the court gave:

“If an employer with knowledge of uncompensated time could evade FLSA liability where the employee failed to follow procedures, an employer and employee could effectively contract around the FLSA by contriving for the employee to simply not report all time he worked.”

The court also said SAP and its managers, “cannot sit back and accept the benefits [of Garcia and Sutton’s work] without compensating for them.”

The ruling closely mirrors another ruling earlier this summer in which a court allowed an employee’s unpaid overtime claims to proceed based solely on his testimony that he’d worked overtime and hadn’t been compensated for it. (In fact, the Garcia v. SAR court cited this case in its ruling).

In that case, the court asked itself the very straightforward question:

“Where Plaintiff has presented no other evidence, is Plaintiff’s testimony sufficient to defeat Defendant’s motion for summary judgment?”

The answer: Yes.

What can employers do?

Both of these rulings set a high bar employers have to meet to get employees’ unfair pay claims thrown out of court.

So, naturally, the best thing for employers to do is avoid the courtroom altogether.

There are two steps you can take to do this:

  • Step 1: Tell your managers that they cannot turn a blind eye to the hours employees work — no matter the hours an employee signs off on having worked. Managers should be reviewing time cards and engaging employees in conversations if they believe time cards are inaccurate.
  • Step 2: Discipline employees for performing unauthorized work or failing to follow your procedures when it comes to reporting work time. As long as employees are paid for all the hours they work, it’s within your rights to punish workers for these actions.

Supreme Court upholds Obamacare again … but why?

Once again the Supreme Court has ruled in favor of the Affordable Care Act (ACA) — and upheld a component that’s become an essential part of the law. So now HR pros can start worrying about the upcoming Obamacare compliance challenges without any major distractions.

The Supreme Court case, King v. Burwell, is an appeal of a July ruling from the 4th Circuit Court of Appeals, which upheld the law’s subsidies.

Had the subsidies been struck down by the High Court, millions of Americans could’ve lost the tax subsidies that allowed them purchase affordable coverage under the health reform law.

In fact,  USA TODAY reported that more than 5 million Americans would be affected if the subsidies are struck down.

How affected? Those subsidies have reduced monthly insurance premiums by 76% (the average monthly premium dropped from $346 to just $82) for those who qualify, according to federal officials.

How we got here

The entire case essentially hinged on one phrase in the health reform law, which says that subsidies — in the form of tax credits — would be offered in health insurance exchanges “established by the state.”

But more than 30 states passed on setting up their own exchanges, so the feds stepped in to do so.

Four Virginia residents — the original plaintiffs in the case — claim that the subsidies are illegal in the states where only federal exchanges have been established.

‘Inartful drafting’

With its ruling, the Supreme Court essentially said that the subsidies should be available to all eligible Americans regardless of whether they live in states that have set up their own health insurance exchanges.

In the ruling, Chief Justice John G. Roberts, Jr. did acknowledge that the specific language in the Affordable Care Act was confusing and problematic. As Roberts put it, the law:

“contains more than a few examples of inartful drafting … Congress wrote key parts of the act behind closed doors, rather than through the traditional legislative process.”

Despite the language, Roberts said the intent of law was clear and that:

“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible we must interpret the Act in a way that is consistent with the former, and avoids the latter.”

Maintains status quo

So where does this leave employers. According to Buck Consultants global practice leader Tami Simon:

“The ruling will not have a significant impact on employers and the human resources department. It maintains the status quo for time being.”

And for employers, the status quo is finding ways to comply with the many complex Obamacare regs, such as:

  • The reporting requirement (2016), and
  • The Cadillac Tax (2018).

Be warned: Employees want more money in 2015, and some are willing to quit to get it

Looks like employees are feeling a little more confident about asking for more money this year — and a substantial number say they’ll quit if they don’t get a raise.  

That’s the bottom line of a recent Glassdoor survey. The fourth-quarter survey, conducted online by Harris Poll, reveals employee expectations around pay raises and job search activity this year as well as sentiment around pay inequalities.

With employee confidence in the job market at its highest in six years, the survey said, more than two in five (43%) employees report expectations of a pay raise in the next 12 months. If employees do not receive that pay raise, more than one in three (35%) report they will look for a new job.

And nearly half (48%) of employees (including the self-employed) say they’re confident they can find a job matching their current experience and compensation levels in the next six months.

Employees expecting raises also made it clear how much more they expect to get paid in 2015. Half (49%) of those who expect to get a raise in the next 12 months sayd they expect it to be between 3% and 5%. This varies slightly by gender, with more men (52%) than women (45%) expecting that 3% to 5% hike.

And get this: A few respondents — 4% — said they expected a raise between 50% and 100%.

Employees also seem to be sensitive to the gender gap in pay.  Most employees (62%) report they do not believe men and women are paid equally. No surprise here: A stronger majority of women (75%) do not believe men and women are paid equally, compared to half (50%) of men.

Glassdoor’s survey monitors four key indicators of employee confidence each quarter:

  • job market optimism/re-hire probability
  • job security sentiment
  • salary expectations, and
  • business outlook optimism.

Here’s a summary of their latest findings:

Job market optimism/Re-hire probability

As stated, 48% of respondents said they expected to be able to find a similar position in the next six months. This is up 1% from last quarter. Of those unemployed but looking, job market confidence increased 10% to 43% since last quarter (33%), also a six-year high.

Job security

Thirteen percent of employees report concern about being laid off in the next six months, down 2% since last quarter (15%) and also a new six-year low. Nearly one in four (23%) employees report concern about co-workers being laid off, up 1% since last quarter.

Salary expectations

Employee optimism for a pay raise remains high and steady since last quarter, with 43% of employees expecting a pay raise or cost-of-living increase in the next 12 months. This is up 1%age point from last year (Q4 2013), and up 4%age points from two years ago (Q4 2012). Thirty-seven% do not expect a pay raise and 19% don’t know.

Business outlook

More employees (including those self-employed) expect their company’s business outlook to improve in the next six months (43%), up 4% since last quarter. Half (49%) believe their company’s business outlook will remain the same, while 8% believe it will get worse. Men are more optimistic (48%) than women (39%) that business will improve in the next six months.

What GOP Congressional triumph really means for employers

So now Republicans control Congress. Will anything change for employers?

It’ll be an interesting political season, that much we can say for sure. But are real changes coming in employment law? Really hard to say.

Ilyse Wolens Schuman and Michael J. Lotito, writing on the Littler Mendelson blog, note that now that the GOP controls both houses of Congress, both Senate and House committees will be chaired by Republicans. They’re expecting those new chairmen to put the screws to federal agencies like the EEOC, DOL and NLRB.

Like this scenario:

Sen. Lamar Alexander (R-TN), current ranking member of the Senate Committee on Health, Education, Labor and Pensions (HELP), has already released a statement promising to “fix our broken system and move our country in a new direction.” Such efforts will include “put[ting] an end to the Obama administration’s unconstitutional overreach …” Republicans have repeatedly criticized the administration of executive overreach.

Over the past year, the White House has issued several controversial executive orders and presidential memoranda, including the Fair Pay and Safe Workplaces Executive Order, which imposes multiple new risks and obligations on government contractors; Executive Order 13658, which raises the minimum wage for workers and tipped employees of federal contractors; and a memorandum directing the Department of Labor to revise its “white collar” overtime exemption regulations.

The Republican majority may use the power of the purse to rein in such initiatives. Specifically, Senate Republicans will likely rely on the appropriations process to block agency regulations, including those issued to implement the President’s executive orders or directives. Lawmakers could include provisions in funding bills that explicitly bar agencies from using the funds to carry out the contested measures.

Harold P. Coxson, writing on the Ogletree Deakins blog, said he expected a lot closer monitoring of the activities of the National Labor Relations Board, including blocking funding for the NLRB’s so-called “ambush election rules” that would definitely make it harder for employers to fight union organizing efforts.
Potential new legislation

On the legislative front, Schuman and Lotito see the GOP taking aim on Obama labor and employment policies through legislation:

Sen. Alexander and Sen. Mitch McConnell (R-KY), who is slated to become the new Majority Leader, have already introduced the National Labor Relations Board Reform Act, a bill that would, among other things, expand the NLRB from five members to six, three Republicans and three Democrats, as well as require a majority of four members to make a decision to encourage consensus from both sides. The five-year terms of the members would be staggered, and synchronized in pairs, with one member from each political party facing confirmation at the same time.

Other bills could challenge the EEOC’s alleged “overreaching” in its enforcement plan, and, of course, the dreaded Affordable Care Act — Obamacare.

But Robin Shea of Constangy Brooks & Smith doesn’t see big changes coming to the health reform law. First, she points out, while the GOP has the majority in the Senate, it doesn’t have sufficient votes to override an Obama veto:

So even though House Speaker John Boehner (R-OH) and Sen. McConnell are saying they’ll work to repeal or partially roll back the Affordable Care Act, expect to see an actual vote that is largely symbolic. The President is expected to veto any but the most incremental legislation, and the Republicans won’t be able to do anything about it unless they can find six moderate Democrats to join them. Are there any moderate Democrats left after Tuesday?

A recent story in the Boston Globe outlined the parts of Obamacare that Republicans plan on targeting: An unpopular tax on medical devices, changing employer requirements on insurance by increasing the definition of a full-time worker from 30 to 40 hours per week, and eliminating rules that most Americans obtain insurance or face a penalty — better known as the individual mandate.

Stocks Swoon, Extending Losses; Bond Prices Soar

Stocks are plunging as traders dump risky assets and park their money in investments seen as relatively safe, such as U.S. government bonds.

The Dow Jones industrial average dropped 440 points, or 2.7 percent, to 15,873 as of 1:25 p.m. Eastern time Wednesday.

The Standard & Poor’s 500 fell 53 points, or 2.9 percent, to 1,823. The Nasdaq composite fell 104 points, or 2.5 percent, to 4,122.

The Dow is on pace for its worst drop since August 2011.

All three indexes are now negative for the year. The S&P is down 9 percent from its record high reached Sept. 18. That’s close to the 10 percent drop that market watchers refer to as a “correction.”

Bond prices soared as investors shifted money into safe-haven investments.

Internet Sales Threaten Shopping Mall Culture

For decades, the mall has been an icon of American life. I remember hanging out there for hours in high school. But the traditional shopping mall as we know it is beginning to show its age. Online and mobile shopping have changed consumer habits. Big department stores like Sears and JCPenney have struggled. And it’s made it hard for malls to justify, even maintain, their prominent place in our retail lives. Listen to this story, here.

Over the next couple weeks, in conjunction with Youth Radio, we’re going to look at the past, present and future of America’s malls. And we begin in the suburbs of Detroit with NPR’s Sonari Glinton.

SONARI GLINTON, BYLINE: If you want to talk about the shopping mall, there are two things you have to talk about – the car and Detroit. And I figured what better place to do that than here at the Henry Ford Museum just outside of Detroit in Dearborn, Michigan? I’m meeting up with Matt Anderson. He’s a curator here. Hey, Matt.

MATT ANDERSON: How are you doing? Nice to meet you.

GLINTON: I’m doing all right. So where are you going to take me?

ANDERSON: We’re going to go into the museum and show you our Driving America exhibit where we talk about the mall in that context.

GLINTON: One of the exhibits that Anderson is responsible for is the Driving America exhibit. It looks at the automobile and the car’s effect on our lives. As we walk around, we come to a place where they explore how the automobile changes and adapts to the needs of families and vice versa. There’s everything from a Packard to a 1980s minivan.

ANDERSON: Detroit is kind of a case study of how the city is reshaped by the automobile. So you see things you might expect, like interstate highways being driven through towns, jobs moving to the suburbs and then shopping malls. Northland is the classic example.

GLINTON: Northland is one of the first shopping malls. It opened in 1954. It was started as an outdoor shopping center and later became an enclosed mall. It was built by the Hudson’s department store, and it created a sensation when it was opened. Anderson says when you think about cars and life in America, you eventually have to ponder the shopping mall.

ANDERSON: The mall is a big deal. It’s a big, big changing point. And it’s arguably one of the most demonstrable effects of the automobile on our culture and our way of life.

GLINTON: It was with this mall that shopping and retail adapted to the automobile. Instead of heading inward on street cars and trains to the city’s central business district, drive out to the mall that’s probably in a suburb near you. 1954, when Northland Mall was built, represents the moment of change for Detroit.

In the 1950s, the city’s population was at its height, and Anderson says with the building of that mall, it was like the storm crew – the harbinger of doom for downtowns everywhere, especially Detroit’s. And he says it also represents one of the central ironies of Detroit.

ANDERSON: There’s something very ironic about it. The car built Detroit and then it sort of tore apart Detroit, if that makes sense. As people drive out to the suburbs to the shopping malls to do their shopping there, the central business districts of cities all around the U.S. start to crumble. Businesses close ’cause they can’t compete. The big chain department stores that traditionally anchor downtowns, they move out to the malls and follow the money.

GLINTON: Anderson says a further irony is that the Internet is making the car and the mall less central to our lives today. After visiting the museum, it’s a short drive to the Northland mall – a few miles away in Southfield, Michigan.

What’s remarkable about Northland is how unremarkable it is. It has the same troubles that middle-tier malls are facing across the country. Traffic is down. The giant five-level Macy’s department store where the Hudson’s one stood before – now whole floors are closed off, and it’s a shell of its former grand self. But that’s today. Sixty years ago, things were very different.

MICHAEL HAUSER: People were hoping that it would be successful, but nobody dreamed that it would be as wildly successful as it was.

GLINTON: Michael Hauser is a Detroit historian. He’s written a couple books about Hudson’s. We sat in the parking lot of the Northland mall on a summer day, and he describes how new-age the mall felt when opened 60 years ago.

HAUSER: Some people waited in line for hours to get into the parking lots here, despite the fact that they held 7,500 cars. Buses were packed. You know, it was something that nobody had ever experienced before.

GLINTON: And the moment people realized they didn’t have to go all the way downtown to shop, it essentially stopped. 1954 was a peak year for sales receipts in downtown Detroit. Things would never be as good downtown as before the malls. And the problems of Northland are typical of problems that malls have all around the country.

HAUSER: With a shrunken Hudson’s store – now a Macy’s store – and with the lack of national retailers – stores like Montgomery Ward, T.J.Maxx, JCPenney gone – you don’t have that traffic to feed off of.

GLINTON: As I stand here looking at the acres of parking at the Northland mall, it’s hard to realize how big of a deal this mall was. What’s interesting about this mall is that it changed, fundamentally, the way we live our lives and do business. And now the Internet is doing to the mall what the mall did to downtowns. Sonari Glinton, NPR News, Southfield, Michigan.

GREENE: And as we mentioned, our series on shopping malls is being produced in conjunction with Youth Radio.

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