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Transitioning Employees from Exempt to Non-Exempt Status
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Workforce Management

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


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


for suggestions on how you can make this transition easier for both

managers and employees. And as always, contact


to help you prepare for the December 1 deadline.

Source: HR Support Center

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