Changing from salary to hourly.

EJennieS

[font size="1" color="#FF0000"]LAST EDITED ON 08-09-02 AT 01:01PM (CST)[/font][p]If we decide to change all non-managers in a department from salary to hourly, are we at risk with the wage and hour people?

Hatchetman

[font size="1" color="#FF0000"]LAST EDITED ON 07-26-02 AT 05:48PM (CST)[/font][p]There should be no problem since non-exempt (hourly) is considered the "preferred" status under the law. FSLA doesn't require an employer to justify non-exempt status but only exempt status. Thus, if an employer even wants to make its managers non-exempt, it can.

Switching positions which qualify as exempt back and forth between exempt and exempt, should be avoided. So, once you make this change, don't plan on switching employees back to exempt status merely because there is "dissatisfaction." And changes in status shouldn't be random. Make sure that all positions that are doing the exact same duties, regardless of their functional or payroll titles, are treated in the same manner under FLSA. Make sure also that minimum wage is met or exceeded, now that you are going to base the employee's compensation on actual hours worked.

Pork

There is a risk if these salaried employees were incorrectly labeled as exempt professionals. You then might cause someone to call their local wage & hour fed office to clarify "can they do that; I liked the salary way of paying me". Additionally, I liked not having to keep a time card and all those hours that I was flexed because I could take work home and get it done and no one had to know that I didn't do the work during the day!" "What, do mean that I should have been paid overtime hours and more money, that they owe me for all those hours that I was allowed to work beyond 8 hours a day and 5 days a week!"

I lost my position as HR because I pointed out to the owners that computer operators doing computer drawings from the multitudes of copywrited patterns were not considered as professional artist creating new designs and new patterns and would therefore be catagories as non-professionals and entitled to overtime pay. Additionally, that there would be a good chance for one or all to realize they had been working under this exempt status for years and could very easily make a call and ask for an audiance and investigation on site. All of which could cost these owners a good sum of money!!! Needless to say I should have kept my mouth shut and found a new company to work for and then quietly leave verses getting pushed out the door, hollowing "but sir, but sir" and no one hearing. By the way the department was audited and it cost them just like I told them it would. So verify that this group is properly coded as exempt. If not watch how you handle it! Good Luck

Hatchetman

I agree with Pork that there is always a risk that you may have improperly "labeled" these employees as exempt" when in fact thay were non-exempt. But if so, get that corrected as soon as possible and pay any back overtime due. FLSA and DOL do consider a window of correction and would probalby see it as a good faith effort to correct any errors.

Of course, explain the changes to the employees.

San Francisco

I don't know what that "window" is, but it obviously closed on our company. We recently settled a class action suit because we had classified our lower level store management as exempt. It did not take a rocket scientist to realize that the majority of their job functions were clerical and, therefore, non-exempt. I was not privy to the reasoning to wait until a class action was initiated rather than settle it on our own, but I believe that either way the cost was going to be exhorbitant - and it was.

Hatchetman

Bascially, if an employer incorrectly misclassifies the position as exempt when it is non-exempt, DOL can go back two years if the error was unintentional to assess back payment for overtime. However, if the error was willful or taken in bad faith, or the employer knew about it and did not take any corrective action, then there's a three-year period that DOL can go back to assess overtime pay, in addition to any fines.

Sometimes an employer will correctly determne a position to be exempt but for some reason, through most likely inadvertency or poor policies or procedures, docking takes place. The window of correction allows an employer to reimburse the employee for the docked money and correct any procedures or policies that created the dock. In this way, if DOL comes a knockin' it is quite possible that it won't find that the employer's original docking actions resulted in the exempt employee being deemed non-exempt. Take a look at 29CFR541.118(a)(6). This obviously wouldn't apply in situations where the exempt status was incorrect from the beginning.