The new salary requirement is a key criteria for whether a position becomes non-exempt for businesses, let's take a look at how employees moving from "salary" to non-exempt might feel and some things you need to consider NOW....

 

Consider these thoughts and opinions:

When this law goes into effective the new salary minimum for exempt will be $47,476 from what it is now, $23,660.  To remain exempt, the salary must go to this minimum by December 1, 2016. Otherwise you need to reclassify the position to non-exempt and they will then be eligible for overtime.  Employers have gained the benefit of not having to pay such employees overtime for many years now.  Some have viewed this as excessive use of their time and unfair, the reason for this law, others realize that being a professional requires putting in that "extra" to ensure work quality and volume are being handled effectively.  It's a matter of perspective of course. 


As employees transition from exempt to non-exempt these are the mixed "emotions" that you may experience such as:

 

  • Some will find it extremely positive as they will now make more money for every hour they work over 40!
  • Some may find it limiting because they are used to working different times and hours to get their work accomplished but now, more structure will be necessary; those casually viewing and responding to texts and emails are no longer possible without logging that time in as hours worked.  Employers cannot allow "off the clock" work without the ability to track that time in order to comply with this  new law.
  • Employees who work from 35 to 45 hours will likely not be happy with this change.
  • Employees who work 50 to 60 hours probably will embrace it.
  • Some will be happy just for the extra time they can spend with family and friends as many employers limit this extra work time.
  • Some will be unhappy with lack of flexibility they once had.
  • Some will actually make less money.
What's an organization to do?
Reclassification does not necessarily mean more money, in fact it could be less
.  Here are some thoughts and discussions that are out there:
  • 'Most organizations are going to convert the annual salary of a given employee into an hourly rate to control the net result of their income to equal the budget the business can afford.  In fact, employers may reduce the hourly rate in such a way to work out to less aggregate pay in the long run, unless overtime is worked.  So the end result being that the employee will make the same amount he/she was making before classified, if they work the overtime they were working as a salaried employee.  
  • Many businesses will simply state, employee cannot work more than 40 hours, period.
  • Some will consider the "salary nonexempt" option.
  • Should you allow them to have company phones?  How will you have them "shut down" to control time on them related to work?
  • What about that "quick" email they want to respond to?  How will you track that and control the time spent on responses?
  • What changes will your supervisors need to make to be sure they aren't engaging nonexempt employees "off the clock"
  •   Strict guidelines will have to be in place and ability to track employee activity related to work more important than ever.
  • Management of non exempt employees becomes more important than ever from their time worked to their overall workload.
  • Train all involved on the changes and the terms of employment as well as supervisory duties that affect such employees.
Plan NOW...think through your options carefully.
  • No matter what you choose to do, the most successful employers will be those that are more flexible with days/hours in order to get the work done as opposed to having it done the same way it always has been.
  • Consider the affects of the desire to shift work to those that remain exempt and can do extra without extra overtime pay.  That will have problems as well as you can imagine.
  • The key here for employers is to control "burning out" the exempt employees and balance workloads with paying the overtime.  Turnover is costly as well as the extremely significant affects of bad employee morale.
 Get the guidance you need! There are good options out there and I can help!
  There are a lot of rules tied to implementation of this law but also some good options to consider while remaining compliant minimizing overtime costs. 

I am scheduling time with my clients to creatively review positions and pay options now to be sure they know their options and find the best solutions to handle the work effectively and manage the budget issues related. 

 December 1st will be here before you know it! Don't delay your response to this important compliance item with significant effects to productivity and your budgets!
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