We research, prepare, execute and then… HALT!
That is what occurred on November 22, 2016 regarding the exemption status changes as proposed by the DOL. At what appeared to be a last minute Thanksgiving reprieve, a Texas Federal Judge entered a nationwide injunction blocking the U.S. Department of Labor from implementing a controversial rule that would have expanded overtime protections, saying the rule improperly created a de facto salary test for determining which workers fall under the FLSA “white collar” exemption. The DOL regulations, among other things, would have raised the salary threshold for exempt employees from $23,660 to $47,476 with increasing adjustments every three years.
Businesses that were impacted by this ruling researched and analyzed what this meant for their company. They reviewed job descriptions, compensation ranges; hours worked, benefit accruals, etc. and made decisions regarding these topics for affected employees. Employees affected by this change might have included; assistant managers, corporate employees in accounting, I, administration, marketing, web designers, et al.
Many companies prepared for this early in 2016 and made the necessary changes to their pay practices and payroll systems that also included having these now non-exempt employees clock in and out to accurately record their hours. Imagine their surprise when this change was halted.
The conversation with employees might have sounded like this from an employee’s perspective. “Based on the proposed changes from the Department of Labor, we have analyzed your role and compensation and determined that we are changing your classification from exempt/salaried to non-exempt. What does this mean? You previously were on salary and worked 55 hours per week and now you will be working 46 (or other) hours per week and paid a regular rate for 40 hours and overtime for the remaining 6 hours.” Many employees were thrilled with the change and others took it as a blow that they had to regulate hours, still others were given raises to move them to the higher compensation threshold. You can’t say “just kidding there is no change”, so what does the employer do now?
Regardless of the future status of the DOL regulations, which are opposed by the incoming Trump administration and the GOP-held Congress, many employers are “staying the course” for fear of damaging employee morale and engagement—at least among those who welcomed receiving overtime pay or were given an upward salary adjustment. If the employer decides to maintain the non-exempt status, they can control costs by minimizing overtime. A consideration is also whether the job meets the duties test for an exempt employees to see if the role even qualifies as a salaried position. Smaller employers may have the advantage of size and can have one-on-one more direct conversations with employeesto explain the turn of events and determine next steps.
If this up to the minute change is indicative of things to come in 2017, employers and HR professionals would be well advised to have a Plan B, C and D and be proactive in the event we continue to experience READY, SET, STOP!