Transitioning Employees from Exempt to Non-Exempt Status

September 2, 2016

Transitioning Employees from Exempt to Non-Exempt Status

In exactly three months, the Department of Labor’s new overtime rules will go into effect and impact nearly 64% of all employees. With the new mandate come changes to how employees will be classified. Employees who will be transitioned from an exempt to non-exempt classification may resent the change in classification. They may feel that tracking time is beneath them, that they’re being micromanaged, that their position has less prestige or that their work has less value. All of this is understandable; being exempt has become a kind of status symbol. But with the doubling of the minimum salary threshold, it will benefit us all to adjust our mindsets.

It’s important to remember that exemptions to the FLSA’s minimum wage and overtime requirements were made as a benefit to employers, not as a reward to recognize employees for their achievements. Being exempt certainly has its conveniences for employees: they usually don’t need to track their hours, they generally have more flexibility, and they’re paid the same regardless of the quantity or quality of their work. But it also has a major drawback: exempt employees aren’t eligible for overtime pay when they work over 40 hours in a workweek.

When you communicate with employees about the transition to non-exempt status, be clear that the change has nothing to do with their performance or their importance to the company. Rather, it has everything to do with complying with the new overtime rules. The classification change is not personal, and likely impacts a number of employees in the workplace. You might also take this opportunity to praise their work and tell them you value and appreciate what they bring to the organization. Give specifics. These employees may feel down about themselves. You can help by building them up.

But your words may sound hollow if your business culture puts exempt employees on a higher pedestal. It’s one thing to recognize the merit of individual exempt employees. It’s another to imply that exempt status itself signifies greater value. Becoming exempt isn’t like becoming partner in a law firm or receiving tenure at a university. When an employee receives a raise or a promotion and thereby becomes exempt, focus on the job well done or on the new duties—these are the things worth celebrating.

Finally, if you allow your exempt employees flexibility with their schedules, allow the same for the non-exempt employees when possible. Time tracking doesn’t have to mean rigid schedules or micro-managing, and for those who have been reclassified because of the new rules, maintaining a perk like scheduling flexibility can help keep morale high.

How you communicate changes with your employees will have a tremendous impact on morale and engagement. Let Paycor help you prepare for the challenging conversations and concerns that will result from this new law. Download our Employer Conversation Guide for suggestions on how you can make this transition easier for both managers and employees. And as always, contact us to help you prepare for the December 1 deadline.

Source: HR Support Center


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