Overtime new rules

HR Southpointe

At the present time we have employees that are legally exempt but we have been paying them overtime.

I would like to make a change and make them exempt. Any suggestions on how to handle this situation. We do not give these people salary increases until June of next year. I would like to start the exempt status in Jan. 2005.

What kind of legal or HR problems can I anticipate? I plan to speak to this group on an individual basis. I have approximately 6 people in this situation.

Sue Congiardo

crawfod

My first step would be to advise top management of the fact that you have identified 6 employees who can now legally be defined as exempt and thus ineligible for the OT wages your company has been paying. I would be prepared to tell mgt how much money this involved. I would tell mgt that it was not illegal to continue paying them OT but that it could be a dangerous precedent, especially if there are others (like maybe yourself) who are not being treated that kindly. Then ask Mgt what they want to do, don't be the bad guy unless it is solely your call.

If you have accurately evaluated their status, you should have no legal issues. Will the employees be disappointed? You bet, but perhaps your generosity of not putting this into effect until 1/2005 when you could implement this 8/23/04 will soften the blow and allow them time to prepare for the reduced income. I am going to assume we're not talking about a lot of OT money to the point that these 6 employees' compensation would now be reduced to a level that could make them seek better paying jobs elsewhere. I might still make the call, but I would think about the consequences first.

I think talking to them one on one is a good idea. Group meetings can turn nasty with one or two outraged employees affecting the rest, even when the rest understand.

pork1

Sue: You have done better than what FLSA requires! What is the reason that you wish to upset the apple cart and stop paying O/T dollars for extra hours work for these 6 people? There are good reasons, but if the present compensation packages work for these 6 and the overall mission is accomplished, why change?

PORK

HR Southpointe

These employees are very well compensated and are officers of the bank. They were not exempt under certain of the old rules but they are now. It is a matter of precedence and salary cost containment as we grow.

crawfod

Just curious since the main new rule change was the $455 per week, and you indicated they are well compensated, what has changed to now make them exempt? Even if they didn't meet the Executive exemption, I would have thought an "officer's" duties would have fit the Administrative exemption.

I'm still waiting for someone to tell me what type of salaried white collar employees there are who have been making less than $455 per week who met the legal definitions of being classified as an Exempt employee, and now are entitled to receive overtime, unless their pay is raised. I think all these numbers everyone keeps throwing around about how many employees are being affected are very unsubstantiated. Just my soapbox for the day.

HRQ

crawford, I just switched 16 exempt ee's to salaried non exempt because of the salary test.

Most of them earn around $375/week base salary and do not meet the new salary test. These folks usually earn between $50-$350/month in performance based incentives, but incentive pay does not count toward base pay.

Some industries just don't pay a whole lot, and our pay is similar to our competitors.

pork1

OK, Now I understand better; however, that still does not change my previous post. The bank has set a precedence of compensation for these people in motion. Here is how I suggest you handle the change: 1) do a 12 month print out a wage history of their combined compensation package.
2) Calculate the average gross $ollar value the company has already paid the individual over the last 12 months with O/T.
3) Meet with the individual and lay out a like Salary amount that would represent the individual's compensation should the individual have been compensated, as an EXEMPT individual without O/T.

You might consider using the overtime money paid last year as a guarntee bonus for staying on-board this year and again next June, 2005. This is the way that our company would exercise company options, if we had anyone that needed to be re-classified.

PORK

Kymm

On these new rules... those of you in California.. are we to now follow the new Fed "guidelines" for Exempt status, or stay with the CA guidelines which have not changed.

Shadowfax

You will have to follow whichever guidelines are most favorable to the ee.