By now, most of you have heard that a federal judge issued an injunction to the FLSA laws that were going to cause most of our companies to do one of two things to a select group of employees - either increase salaries to continue to make lower level professionals eligible as exempt employees or move those employees to hourly status, making them OT eligible.
The injunction means you aren't required at this time to make the changes covered by that executive order. Of course, many of you have prepared and also communicated the changes, as Jon Hyman of Workforce.com outlines below:
Let’s say you’ve been a diligent employer and have done everything to prepare for Dec. 1. You’ve reviewed the exemption status of all of your employees. You’ve determined the group of currently exempt employees earning less than $913 per week. And, for those employees, you’ve determined which to keep at the same salary level (to be converted to salary non-exempt come Dec. 1), which to convert to hourly non-exempt (including determining the proper hourly wage), and which to keep exempt by grossing up their salaries to the $913 level. You might have even implemented a fluctuating work week for your new class of salaried exempt employees to try to control overtime costs. And, because this ruling came so late, you’ve almost certainly communicated these changes to your employees.
If you were waiting until the last possible moment to communicate the changes, you're good - you can wait and see what happens. If you have already communicated, it's more complicated.
But there's a silver lining to not making the changes or to rolling those changes back for now, even if you you have already communicated the changes.
That silver lining is this - there's a significant portion of the American employee base that was going to be moved from Salaried to Non-Exempt (hourly) that didn't want anything to do with the change.
The group that feels this way is pretty easy to spot. Most of the time, they are the portion of your workforce that doesn't hold college degrees and started with you in an hourly role, paid their dues and then got the feeling they had arrived professionally by being promoted in to a salaried spot. In most companies, those early exempt positions start in the 30k's and go up from there.
That group put in the work and got promoted. Some of them worked more than 40 hours a week in those roles. Some did not. But in this segment of your employee population, not having to count hours, punch a timecard and do anything else associated with an hourly role was viewed as a great thing.
This is the group of employees that feels like they're being demoted by the change to hourly if they were impacted by the current FLSA change. Doesn't matter if they're OT eligible. They don't want the classification change.
Many employees view a forced move from salaried to hourly per the FLSA changes as a positive. But a significant portion of employees view that change as a demotion, even if they have a chance to earn more. This group of employees view the salaried designation as having arrived.
Don't forget this group of employees as you figure out what to do with the now stalled FLSA changes.