6 min read
Update: As of July 1, 2024 changes have been implemented to the Fair Labor Standards Act. For most up to date information, visit the Department of Labor website or schedule a consultation with Fuse.
The changes to overtime rules will affect more than four million workers in the US. Workers with FLSA exempt status will become nonexempt and eligible for FLSA coverage. This is great news for employees! Right?
Not every employee will see it that way.
The new overtime rules don’t automatically mean these four million employees will now be earning time and a half alongside their salaries. Rather, businesses will shift the pieces to make everything fit into the budget puzzle.And HR will need to communicate the changes to their employees the right way. Some employees may have strong feelings about how they’re classified based on some myths they believe about FLSA status.
To classify an employee’s FLSA status according to the new overtime rules, answer the following questions:
- Does the employee earn a salary?
- Does the employee earn at least $43,888 per year or $844 per week?
- Does the employee’s role require certain responsibilities or functions that the Department of Labor considers exempt duties?
While there are a few exceptions, employees must meet all three of the tests above to have FLSA exempt status (exempt from FLSA coverage). If an employee does not pass these tests, their classification is likely FLSA non-exempt. This means the employee is eligible for FLSA coverage including overtime pay.
How will employers respond to the changes to overtime rules? There a few ways it could play out. For employees who will switch to nonexempt from FLSA exempt status due to the change in the salary threshold, there are a few likely scenarios:
- Salaried employees who just miss the threshold for FLSA exempt status may get a salary bump to keep them exempt. This is likely to happen only in cases where the cost to pay overtime is greater than the salary increase.
- Employers will enforce break times and prohibit employees from working overtime or working-off-the-clock.
- Salaried employees may change to hourly workers and lose their FLSA exempt status.
How do you prepare employees who may lose their FLSA exempt status?
For many organizations, being an exempt employee holds a greater sense of status than just labor standards. If FLSA exempt employees exchange their salaries for hourly wages and time clocks, they may not be happy. How will you implement the changes and keep employee morale up?
Help employees understand the truth about FLSA exempt status and shine light on the false ideas that have been created about classification over the years.
3 Myths Employees Believe About FLSA Exempt Status
Myth #1 Losing FLSA exempt status is a demotion.
Because of the implications surrounding FLSA status in many workforces, an employee who changes from FLSA exempt to nonexempt may see it for more than a labor law status switch. HR experts at SHRM predict many employees may see the switch as a demotion. There is pride in being a salaried, exempt worker hourly or nonexempt.
“Employers can expect many employees to feel hurt and under-appreciated,” says Alice Kilborn, SHRM-CP. “Many workers place a premium on the prestige of being considered an exempt or salaried employee—no matter how much we emphasize that it’s just a categorization of pay and not a reflection of importance or level of contribution.”
Robert Boonin, immediate past chair of the Wage and Hour Defense Institute, says “It'll be a cultural change to many and perceived as a step back in career growth.”
It’s important to communicate early and often with your employees. Make it clear to employees that FLSA exempt status is merely a categorization not a badge of honor or importance. Stay educated about regulations surrounding the FLSA. Hold a Q&A or office hours where HR reps will be available to answer questions employees may have about the changes and how they affect their positions and classifications. Be careful about the way your organization speaks of the different classification of workers so employees do not believe one to be more important than the other.
Myth #2 Tracking time is for hourly workers
Because of the stigmas surrounding hourly workers, some employees may view clocking in as a tedious task that takes away from their value as an employee. While it’s important to stress the value of all workers, no matter pay level or job title, you should also use this as an opportunity to show employees that tracking time is important for everyone, regardless of pay rate or classification.
Many federal laws including the FLSA and the Affordable Care Act require employers to keep records of employee hours worked. From intern to CEO, everyone needs to be tracking time.
And there’s more advantage to employee time tracking than legal reasons alone. Employees who track their time have more insight and accountability around the work they do and the way they spend their time at work. This insight and accountability can improve employee productivity and output. Whether for purposes legal or practical, a time tracking system is imperative for all employees at all levels and classifications.
Myth #3 Unplugging from work means I’m not a dedicated employee
Your organization may enforce stricter policies about break times and checking email after hours to ensure employees stay within their appropriate hours limits.
For employees who take more than 40 hours a week to complete their work or stay plugged into work after work hours, this may pose a big challenge.
This means HR will need to emphasize the need for these breaks and boundaries. Be sure managers don’t make an employee feel guilty for taking a break or PTO day. Encourage employees to take a lunch break and get away from their desks. That way they return refreshed and ready to complete their work for the day.
Don’t let employees feel like they’re viewed as disengaged or undedicated if they don’t respond to an email after hours. Encourage them to put phones and laptops away when they get home and spend time with friends and family instead.
Encouraging employees to unplug not only helps them stay within their hours but also helps them avoid employee burnout in the long run.
All employees are a valuable part of your company and it’s important everyone knows and believes that. Be prepared to have transparent conversations with employees about these changes and how your company is handling them. If you’re unsure about the changing rules and how to prepare your business for them, join us for our upcoming webinar, Staying Ahead of the FLSA Changes, where we will walk through a break down of the FLSA changes to overtime rules and what they mean for your organization.
