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Overtime Rule

Recently my company reclassified status from exempt to hourly rate per hour. Federal law was placed on hold by DOL on 11/22/2016. Exempt status change to hourly was effective on 11/21/2016. Do we keep current status hourly or revert back to exempt?

A lot of employers are in the same boat and there is no clear answer. There are many opinions on whether to uphold the reclassifications or reverse them. Ultimately, you have to weigh the risks of both options.

For some employees being paid for all their hours worked is a good thing while others may have felt demoted for no longer being treated like a “professional.” Either way the changes have already been made and, for most, the emotions have settled. Reversing the classifications now may just lead to more confusion and anxiety. It’s likely that employee morale, engagement, and possibly productivity may suffer, especially for those who were actually happy about the reclassification. So, consider how employees initially responded to their reclassifications and how employees will respond to reversing the changes.

It’s also important to remember that there still is a possibility the new rules will be upheld and enforced retroactively. If this is the case, employers may be responsible for overtime payments for exempt employees who no longer meet the criteria for exempt status under the new rules backdated to December 1st. This can be a timely and costly endeavor.

There are a few things to keep in mind if you decide to reverse employees back to exempt.

Keep records of hours worked for exempt employees. If the new overtime rule is upheld retroactively, accurate records will help ensure employees who don’t meet the new exempt criteria are back paid properly and will reduce the likelihood of employees filing wage claims.

Since a few weeks have passed since you initiated the payroll changes, you should pay employees as agreed upon. Don’t backdate the reversal.

Lastly, some states require advanced notice of pay changes. So, make sure any such applicable law is followed for any new changes.


This entry was posted on Thursday, December 8th, 2016 at 1:37 pm and is filed under
Labor Laws.
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