HR Tips for Handling the Re-Classification of Your Employees
The Department of Labor’s proposed changes to the FLSA overtime rules—which would raise the minimum salary threshold for exempt employees to $50,400—could pose significant operational and financial implications for your businesses. But that’s not all. If the final overtime rules are approved, many of your exempt employees will become non-exempt, and your employees may see the new classification as a demotion.
It should come as no surprise that your employees will blame you, their employer, not the Department of Labor. You need to be prepared to deal with this potential managerial nightmare. With the finalized rules set to come out before the end of 2016, you must start prepping your managers for these potentially awkward employee conversations:
- The Workload
Do you expect newly non-exempt employees to be as productive working 40 hour work weeks? If your answer is no, you must ask yourself two questions. Will you decrease your employees’ hourly rate and allow them to work overtime? Or will you decrease their workload?
Whichever decision you make, it will require a thought-out conversation with those employees. Especially if you plan to take a few tasks off their plate. Your best employees will see fewer responsibilities as a demotion.
- The Salary Switch
Don’t be surprised if many of your employees see the switch from salaried employee to hourly employee as a downgrade. To many, earning a salary comes with professional status—and punching a time clock will make them feel as if they’ve lost that status. Which is why HR must prepare managers with the right training for ensuring employees that their status is not been devalued in anyway.
- The Decrease in Flexibility
In a recently conducted Society for Human Resources survey, over two thirds of HR professionals said the DOL overtime rules will likely lead to decreased flexibility and autonomy. For instance, non-exempt employees will need to punch in when they get to work and punch out when they leave. That means leaving a little early for an appointment, or coming in late due to a sick child, will result in less pay—whereas before, it did not. This is one of the main reasons many people view the switch from exempt status to a non-exempt status as a demotion.
There’s no easy way to explain to employees why a re-classification is necessary. The best way to sell your employees on their new non-exempt status is to emphasize their finite work week. If employees had previously worked more than 40 hours a week, they will now have more free time to spend with family and friends. And if your company decides to let employees work overtime, they can expect to be compensated for it. But at the end of day, it’s important that you stress the new work/life balance.
Want to learn about what the proposed DOL overtime rules mean for your business? Download our eBook to learn how to your keep labor costs down while maintaining FLSA compliance.