Transitioning Employees from Exempt to Non-Exempt

Employees who will be transitioned from an exempt to non-exempt classification because of the new FLSA overtime rules 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 when it comes to transitioning employees from exempt to non-exempt.

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.

Download our memo on time tracking for exempt employees, visit our FLSA Overtime Rule Resources for more information, or contact us at (518) 373-4111 to learn more about how GTM keeps clients compliant with labor laws.