How to address concerns when moving an employee from salaried to hourly

With upcoming changes increasing the federal annual wage minimum taking effect December 1, 2016 there may be some anxiety or discontent with some of your employees who will be moved from exempt (salaried) status to non-exempt (hourly).

The annual wage minimum requirement for salaried/exempt status will change from $455 per week ($23,660 annually) to $913 per week ($47,476 annually) under this legislation.

When moving employees to an hourly classification under the new regulations, it’s helpful to understand the employee’s perspective.  Although the intent of the Fair Labor Standards Act is to protect employees from being overworked and underpaid, many employees perceive an hourly classification as having a lower status compared with those classified as salaried.

In delivering this message, here are a few tips that may ease their concerns:

  • When explaining the reclassification, explain that this change is based solely on legislation enacted by the U.S. Congress and has nothing to do with their job performance. Assure them that this is not a demotion, but a pay reclassification.  Explain to them that the change to hourly status is intended to assure that they are paid for overtime hours they work.
  • There also will be an adjustment phase. Employees that are now salaried may not be used to tracking their work hours or using a time-keeping system.  It is important to stress that this will be the new norm and that they must report all hours worked, including work from home whether via remote web or phone calls.
  • Each company will have different interpretations of flexibility in the workplace, but if your employees are used to a certain level of flexibility when with their schedules, you may want to continue that practice. Explain to them that they will have the same flexibility for doctor’s appointments, long lunches with an old friend, or leaving early on a Friday during the summer.  Make it clear that when they work 40 hours for the week, their weekly pay will remain the same.  But be sure they understand that if they do not make up this flexible time, their check will be less.
  • Keep an open door policy with your employees to address their concerns. It’s a good idea to map out potential paths for them to move into positions that remain salaried positions.  Help them understand what those positions are and direct them towards achieving their goals so they are able to move into those jobs.  While doing so, however, be sure to stress that their value and responsibilities within the company in their current position has not changed.  Only their pay structure has.

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Frank Lewandowski, PHR, SHRM-CP