Transitioning Employees from Exempt to Non-Exempt Status
Transitioning Employees from Exempt to Non-Exempt Status

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


Subscribe to Our Resource Center Digest

Enter your email below to receive a weekly recap of the latest articles from Paycor's Resource Center.

Check your inbox for an email confirming your subscription. Enjoy!

More to Discover

CMS Waives Quality Reporting Requirements Due to COVID-19

CMS Waives Quality Reporting Requirements Due to COVID-19

Many government officials are worried the Coronavirus outbreak will overburden the U.S. healthcare system. In a drastic effort to help healthcare providers focus on patient care rather than paperwork, the Center for Medicare & Medicaid Services (CMS) will waive multiple key quality reporting requirements. What Does CMS Waiving Reports Mean for Healthcare Providers? Q4 Reporting Deadlines Are Now Optional The deadlines for 2019 data submission for the Medicare Shared Savings Program, the Quality Payment Program, and affiliated merit-based incentive program (MIPS) will be extended from March 31 to April 30, 2020. MIPS eligible clinicians who miss the April 30 deadline will qualify for the automatic and uncontrollable circumstances...

How to Make Tax-Free Disaster Payments To Employees

How to Make Tax-Free Disaster Payments To Employees

The pandemic is putting a big strain on everyone, maybe most of all your team, and you want to do everything you can to help.In a national emergency, employers have the freedom to offer unlimited tax-free financial assistance to employees who need it, with minimal administrative burdens. These disaster payments will be exempt from both federal income and employment taxes. What Disaster Payments Cover Disaster payment to affected employees can cover a broad range of “personal, family, living or funeral expenses (not covered by insurance)”. These may include: Unreimbursed Medical Expenses This can range from vitamins and over-the-counter medications to co-pays. Cleaning Products Disinfectant and hand-sanitizer for employee’s homes can help...

Paycheck Protection Program (PPP): What You Need to Know About Payroll Protection

Paycheck Protection Program (PPP): What You Need to Know About Payroll Protection

You need payroll protection. The federal government wants to help. Here’s what you need to know. The Paycheck Protection Program (PPP) As part of the $2 trillion aid package unveiled in the Coronavirus Aid Relief & Economic Security (CARES) Act, $349 billion was dedicated to the Payment Protection Program (PPP). This offers federal guaranteed loans to businesses with fewer than 500 employees to cover payroll and other essential costs.The federal government is focused on releasing funds quickly and with as little red tape as possible, giving small businesses a big boost right when they need it. And here’s the best part—if you use the funds to retain (or rehire) your employees, the loans don’t need to be repaid.View Payroll Protection...

Paycor's COVID-19 Command Center

Paycor's COVID-19 Command Center

We're excited to announce the release of Paycor's COVID-19 Command Center, a new analytics solution that delivers instant insights for crisis management. With the COVID-19 Command Center, you'll be able to: Prepare with real time insights Plan with actionable data Respond with the help of HR experts Recover quickly by playing the long game now Discover how your organization can make the best possible decisions with real time data, actionable insights and expert HR counsel.