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2 Things to Do Before Moving Salaried Employees to Hourly for FLSA Threshold

On March 7, 2019, the U.S. Department of Labor (DOL) announced its proposed rule to increase the standard salary threshold under the Federal Labor Standards Act (FLSA). See this post for updated information.

If finalized, the proposed change to the Fair Labor Standards Act (FLSA) salary level (to $679 weekly, or $35,308 per year) would make 1.1 million additional workers eligible for overtime benefits. As a result, some employers may choose to reclassify salaried employees earning less than that to hourly.

If this would be part of your organization’s response to the proposed threshold, don’t overlook your employees’ reactions to that change. Moving from salary to hourly may seem like a demotion to some of them, so it’s key you handle changes thoughtfully. Here are two tips to handle those conversations gracefully.

1. Explain the law

It’s best to have an HR professional lead this conversation with each individual employee, with or without his or her manager. That’s partly because it’s such a tough conversation to have, and partly because the law itself is so technical. HR tends to be more well-versed in the specifics of employment law than most frontline managers, so it’s helpful to have an HR professional in the meeting to answer related questions.

Make sure to point out the threshold change benefits the employee, and not just the law or your company’s need for compliance. Let the individual know that now, anytime he or she works more than 40 hours in a week, it will be reflected as overtime wages in the next paycheck. The change intends to ensure fair compensation, and is not a reflection of a worker’s value. Additionally, the duties of the role have not changed, but the new requirement is forcing employers to re-evaluate how they classify positions.

2. Discuss time tracking

This might seem elementary, but for many salaried employees, the hours they work are not accurately tracked. They’re not in the habit of clocking in and out, and it’s going to take some adjustments, reminders and coaching to ensure their time and attendance data is accurate.

Minimize issues by impressing upon newly hourly employees the importance of accurate time tracking. Set expectations, including how to track breaks and lunches and when and where to submit timecards. Remind individuals it benefits them to track their time accurately: It directly affects their take-home pay.

You may have to encourage some employees not to exceed 40 hours a week, but take note: Employers must pay employees for overtime worked, even if it wasn’t approved. While it’s permissible to discipline employees for taking unapproved overtime, it’s better to have a proactive conversation and set clear expectations. And simply not paying for that overtime could get you into a lot of legal trouble.

Minimizing low morale

If changing some salaried employees to hourly is the right choice for your company, you can pre-empt a significant amount of concern by discussing the change directly with each affected worker. Emphasize their continued importance to your company, answer their questions and set expectations, and reassure them the switch is in their favor.

This hourly employee stigma is only one facet of the proposed FLSA changes employers should consider. Get a comprehensive overview – including ways you can prepare now – in our free white paper.