Human Resource Blog

Salary to Houly

We are converting an entire dept. from salary to hourly. Their pay will remain the same. Can you recommend the verbiage to use in a memo informing them of the change?

There could be several reasons why you would make this change, including restructure of the organization, changes in duties, or simply the realization that the positions have been misclassified. If there have been business changes that have resulted in positions that were once exempt becoming nonexempt, you should explain this to the affected employees. If it is a case where the positions should have been nonexempt all along, it is best to avoid drawing attention to the error, lest you invite employee complaints.

If the positions have been misclassified for some time, there may be past overtime pay that is due. Some employers will go ahead & pay the amounts they believe to be due, but most prefer to wait to see if any wage and hour complaints are filed with the Department of Labor (DOL). If so, you may be liable for unpaid overtime for the past two years. If the DOL feels the misclassification was intentional, they can recover back wages for three years.

Unfortunately, since most employers do not track the time of their exempt employees, there may be no records of exactly how many hours the misclassified employees have worked over the past two to three years. Therefore, in most cases, the DOL will simply take the employee’s word for how many hours they worked.

Any time there is a change to the terms of employment, including a reclassification of a position, the employer must give adequate notice. Most states do not specify a minimum notice period, but it should generally be at least one pay period prior to the change. In your notification, emphasize that the employees will now be eligible for overtime. The news may be more readily accepted if there are other positive changes occurring at the same time.

It is better to address the issue in a matter-of-fact way by stating that as a result of restructuring/position description changes/etc., the following positions will be classified as overtime-eligible, effective on the following date. And make sure the employees know that they must track their time and how this is to be done.