Well, we knew this was going to happen. The U.S. Department of Labor issued a ruling this summer that changed the overtime rules under the Fair Labor Standards Act (FLSA.) The new rules go into effect on December 1, 2016.
Organizations are getting ready and making changes. Some of those changes involve converting salaried employees to hourly status. That’s what today’s reader note is about.
I originally happened upon your site in looking for information about the 2016 FLSA overtime issue. I did not realize, when your site was included in search results that you were a “management” site. I am in no way involved in any kind of management. I am an employee. Until now, I was salaried exempt. And I’ve been changed to hourly, “time clocked.” I resent it immensely. I was told it was NOT a punishment, NOT a demotion. It FEELS like discrimination, punishment, and demotion it might as well be. I also feel hurt and humiliated. But all that is just too bad. I don’t feel like there is anything I can do about it.
I am a human resource, equal to any other resource; a desk, a computer, a box of computer paper-not an intelligent, emotional, feeling PERSON. I am penalized if I am late, leave early, take 30 extra minutes for lunch and such, but am not guaranteed any overtime. The employer does not have to let the non-exempt, hourly employee work overtime-ever. So why am I supposed to be impressed with being eligible for overtime? Plus, I must work 40 hours for overtime to be paid at time and a half. If I work 8 hours in a week that included a holiday I get paid only straight time for that 8 hours.
I realize I am venting and it is pointless, I just wanted somewhere to be able to say how I feel about the federally mandated overtime monster. A more legit question after all that. If, in the future, I should miraculously receive enough raises to be over the stigma point of $47,476, would I be exempt again?
While I’m not happy to receive a note from a frustrated employee, hopefully this note will help organizations and individuals process what’s going on. I’m on the Society for Human Resource Management’s government affairs A-Team and one of the key arguments we shared with our congressional representatives about this ruling was exactly the point being made by the reader – the resentment of being made hourly, or “time clocked.”
That being said, the ruling is still scheduled to go into effect in December. It’s good to see organizations taking their responsibility to maintain compliance seriously. And, they were right to tell the employee that it’s not punishment or a demotion. Because it’s not.
However, I completely understand how it feels. I remember when I became salaried for the first time. Even if you never come in late or leave early, there’s something about being salaried. And the reader is right that the company doesn’t owe employees overtime. Most organizations try to manage their overtime expenses, so it’s not a given.
There is one thing I do want to point out to all the employees impacted by this ruling. I’ve never in all my years in human resources ever seen an employee get promoted based upon the way they were paid. Promotions happen based on an employee’s knowledge, skills, abilities, and attitude. So is it possible to get promoted and break the minimum weekly salary requirement – basically becoming salaried again? Yes.
I know employees will not like this decision. Many organizations don’t like it either. But we have to follow the law. Employees, like organizations, have the ability to contact their congressperson and express their thoughts. There is a piece of pending legislation called the Overtime Reform and Enhancement Act (H.R. 5813) that doesn’t eliminate the salary threshold, but does phase it in over time to help employers and employees manage this change. Check it out and see if it’s something you want to tell your congressperson to support.
[clickToTweet tweet=”How an employee is paid doesn’t change their value to the organization” quote=”How an employee is paid doesn’t change their value to the organization” theme=”style3″]
Organizations are going to have to find a way to make sure that employees who are frustrated by this change continue to feel important. Just because an employee is paid differently doesn’t change their value to the organization.
Image taken by Sharlyn Lauby while going the wrong way at the Gaylord Palms Hotel in Orlando
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Shane F says
I’m confused.
Being switched to “non-exempt” is a win for the employee, not a loss. The employee will now be compensated for any and all overtime worked, whereas the employee previously did that work for free.
I understand that it might not feel good to be reminded that one’s total compensation is below a certain threshold. But when the reminder comes with a financial benefit, the resentment seems misplaced.
Sharlyn Lauby says
Hi Shane. Thanks for the comment. You’re right – for some employees moving from salaried to hourly will definitely be a win. They might receive overtime pay and if they don’t, they’re not working super long hours.
However, some organizational cultures have placed a premium on being paid salaried. That’s how they sold the position. Now they’re having to reverse their stance.
It’s not easy and it’s going to take some getting used to – by everyone.
Christy says
I currently have two employees that will be moving from salaried to hourly. One of those employees is incredibly disciplined, knowing he is paid for 40 hours, always conscious of the hours he puts in. The other averages about 30 hours a week, coming in late, leaving early and taking extended lunches. For the first employee, the change won’t hurt him or be a struggle to conform to. The second will have to make drastic changes to maintain the paycheck she’s grown accustomed to.
nonpartisan says
It’s advertised as a good, positive thing and might be for some people. But there are many more who are going to get paid less thanks to the new OT law, not more. The rule is doing the opposite of putting money into middle class pockets. It’s taking it out.
Regional differences were never considered. $50,000 is a very high salary in some places as compared to NYC just a few hours away. Many in this small, economically depressed city are affected. Not one of the thousands making under the threshold working at the university medical center with 20,000 employees are helped by it. No one’s receiving a raise either.
Although employers have the option to choose salaried non-exempt, the majority are converting salaried exempt to hourly. It’s easier on their budgets, but detrimental to employees. Part time employees who used to have benefits as salaried are also “reclassified” to hourly. They will lose even more benefits and protections by working under 30 hours.
It’s not required that employees punch in and out, but easier on the employers. So we’re having to do just that. Which means no more flexibility or telecommuting, particularly for part time employees, because it’s harder to accurately track.
Flexibility of “unlimited” time for appointments or sick time is also gone. At my workplace, we will now get only 40 hours for the year to be used for appointments, sick days, etc. When that runs out we either have to agree to not get paid or use vacation time.
Vacation time is accrued differently for hourly employees compared to salaried. We’ll get less vacation time. Add the fact that vacation time is used as PTO time, we get even less vacation time than that.
Benefits – short term disability, life insurance, retirement, health insurance – are different for hourly employees as well. We’ll get less but pay more. Parking fees and health insurance premiums are higher for hourly.
We’ll be paid only for time worked right down to the minute. Due to the payment schedule some will already be getting $300 less every month than they have been. That’s if working a full 40 hours. Working anything less will reduce paychecks further. Even though yearly salary is said not to change. Rather than a steady paycheck that can be counted on, it’ll be variable. Monthly bills don’t change but our paychecks sure will.
We will never receive the apparent “benefits” of being eligible for overtime pay. No one works over 40 hours. Hours have always been capped even for salaried. Overtime needs approval. But it’s never approved. An hourly employee consistently working unapproved overtime will be terminated.
It’s making many things much worse for people who are already struggling financially. No amount of sugar coating or positive spin can change that.
No matter what anyone says – It’s not progress, it IS a demotion.
Kurtis Raddatz says
Well said. Thank you for putting into words what I have been trying to say since the news of the demotion. Remember when hard work and willing to put in overtime would separate you from the pack. Now it will actually penalize me one way or the other, I may get a few hours overtime but the company will issue disciplinary documentation. I gladly check e-mails at home where it is uninterrupted, and quiet…now that is considered overtime and is not acceptable. There has to be a middle ground here. What options do we have?
Sharlyn Lauby says
Thanks for the comments. You’ve probably noticed this legislation is in the news, so staying on top of any proposed changes will be important.