#HRleaders #EmployeeClassification #LegalCompliance
Hey everyone, I’m facing a tricky situation with my executive team wanting to switch our salaried exempt full-time employees to hourly due to billable hour concerns. 🤔 I need your advice on how to navigate this change without causing disruption or legal issues.
Here’s what I’m looking for:
– What questions would you ask in my position to ensure a smooth transition?
– Any recommendations on how to handle changing employee classifications with the new laws in effect?
One possible solution I’m considering is conducting thorough employee consultations, explaining the reasons for the change, and offering support during the transition process. 🤝
I would really appreciate your insights and advice on this topic! Let’s discuss and share our experiences to help each other out. ✨ #HRadvice #EmploymentLaw #LeadershipChallenges
What’s their FLSA status right now? If they are exempt then switching to hourly and presumably non-exempt is much more compliant. Yes, it’ll mean timesheets and people see it as a demotion but unless they satisfy the flsa exemption requirements this change helps you avoid systematic wage theft for your delivery staff.
Are these employees salaried non-exempt and moving to hourly non-exempt? It’s not a large change, as they should be tracking hours already.
If you’re saying that they are salaried exempt then I would have some concerns with delivery drivers being classified as exempt already but would need more information to help with the discussion.
If the employees are currently being paid on a salary-basis, and exempt, I would say this is a move toward compliance. “Frontline delivery staff” unlikely meets any of the FLSA exemption rules. If they are being paid a salary and still being paid overtime, it’s just a minor change. As of today, 7/1/24, laws are changing and many of us are being forced to change statuses, regardless of the impact on morale. Either way, it’s a good time to do it, as you can ‘blame’ the dumb ol’ government for regulatory compliance versus trying to soften what is perceived as a ‘demotion’ of sorts.
you need to communicate this well. There may be upside to employees as well that will bite your boss when they start putting in for OT
Federal gov is enacting a new law effective today and again Jan 1 on what an employee needs to be paid at to even qualify as salaried anymore so you might check if that affects your employees anyway – you might not have a choice
When an employee changes exemption status, I have a sit down meeting with the supervisor, employee and myself to explain the ‘why’. You will explain to the employee that they are NOT getting a demotion.
I provide a memo with effective date and changes (in your case- now eligible for OT. They need to complete a timecard?). Employees can of course ask questions.
For legality, it is much less risk to a company for employees to be non-exempt hourly. I am used to seeing the opposite, where top leaders want everyone Salary so they don’t have to pay OT.
They are already non exempt, so they are switching from salary to hourly. Let them know it’s a management decision and not yours. You don’t have to go in depth, it’s not your responsibility to do so. If you need to, put it on the new flsa laws. They should already be tracking their hours if they are nonexempt salary. Now they just need to do so to be paid. It’s for accounting purposes.
Is the CEO suggesting converting employees to hourly pay or just that the CEO wants to bill the clients in an hourly basis? If it’s the former, no offense to your company, but your CEO doesn’t seem to understand how to run the business effectively.
How you classify your employee based on FLSA doesn’t need to correspond to how your CEO wants to bill clients for work. Salaried staff are billed on an hourly basis in many professions, and is a pricing decision, not a employment law decision.
While s/he can bill the OT to clients, the co.is also taking on more costs by having to pay OT, so it doesn’t help drive revenue much.
Salaried non-exempt are not affected by the new increase for salaried “exempt.” We have someone that is salaried exempt, and we are changing the position to salaried “non-exempt”.
1) Employee continues to receive the salary, even when they work fewer than 40 hours.
2) Employee now receives overtime if they work more than 40 hours in any specific week. And since the employee doesn’t. There’ll be no change as far as the employee is concerned.
How exactly would this increase profit margins? Will you be cutting their pay and/or hours? Being nonexempt will open you up for liability of paying overtime which is more expensive than having your current ot exempt workforce.
Just because someone meets the threshhold and requirements to be exempt doesn’t mean they have to be exempt. Switching them to nonexempt shouldn’t cause legal issues in and of itself. We have a bunch of managers who are currently exempt and we’re transitioning them to non-exempt on Jan 1 (if the increase goes through). To the higher ups, I would explain how the projected OT could negatively impact the company and reduce emoloyee flexibility in a job with unpredictable schedules. For the employees, I would paint it as a benefit – they now get paid OT.
As long as you are not classifying non-exempt as exempt, you don’t have to worry on a compliance level. You could choose to classify all of your employees as non-exempt if you wanted to.
Rolling out the change should be done by focusing on the positives. Emphasizing the fact that they will be paid for all hours worked. Let them know it’s not a demotion or a change in duties. Be positive.
Have a clear and easy way for them to complete their timesheets. Work with your payroll company to get clear instructions on how to make it easy for your employees.
We don’t use time clocks. We use timesheets and allow them to complete them daily, weekly or by pay period. As long as they are completed before we run payroll. We send reminder emails and are very connected via notifications on our HRIS system.
I am also a department of 1. We’ve been doing it this way for about 2 years now and it has been working for us.