New Labor Law will require changes ….
A Plan for moving an employee from ‘Exempt’ (salaried) to ‘Non-exempt’
Historically many employees have considered employees as salaried when in fact they should have been being paid overtime. As of December 1, 2016 a new Federal policy will be going into effect to ensure that employers are getting this right. You definitely want to do it right!
There are very few employees that qualify for the “exempt” status and as of 12-1-2016 the weekly pay will be a primary basis for the decision. If the employee makes less than $913 per week they need to be paid hourly and be paid overtime if they work more than 8 hours in any given day or more than 40 hours in any given week. The 8 hour day/40 hour week is a California Labor Law requirement and other states may have other requirements.
Non-Profits are not exempt from the new law. The only exempt organizations are:
- Schools and preschools
- Government agencies
- Businesses providing medical or nursing care for residents
Ordained pastors are exempt and likely licensed pastors are exempt also. I will include that decision in one of my next newsletters.
Salaried workers who do not primarily perform executive, administrative, or professional duties are not eligible for the white collar overtime exemption and therefore are not affected by the final rule. Very few workers should be classified as “salaried”.
Need to change workers from salaried to hourly?
- Make sure you have an overtime policy in place before you make the change. Our policy states hourly employees cannot work overtime without approval. That is really necessary to make it easier in the future and also to stay within your budget. And even if that is the policy if the employee does work overtime without approval you must pay the overtime.
- You also want to be sure your regular policies include that your regular day ends at midnight. That becomes important if, for example, you have youth workers doing a sleep over. That will allow you to pay 8 hours on one day and another 8 hours on the second day without requiring overtime.
- It is best to make that change at a month end.
- Talk to the employee and explain the need to change their payroll structure
- Make sure you and the employee agree with the number of regular hours they work currently
- Calculate what the employee’s salary would be by dividing the salary by the number of hours they work
- Decide if you will want to pay that hourly salary and possible overtime
- Or if the employee regularly works overtime you may want to make the hourly salary less so that when overtime is paid the salary will come out close to what they are used to receiving. Hopefully they are not working more than 40 hours a week now.
Be sure to put the new arrangement in writing and both of you sign the document. There should not be an issue if you are paying about the same amount. One thing to be prepared for is a time when there is a 28 day month. The employee will get paid less that month because of the reduction if work days. They end up getting paid the same by year end but there are times they receive less in one pay check. Sometimes they will receive more but you likely will not hear about that one.
I may have left off something out. Please be sure to contact me and I will get right back to you.
Reminder … I am not an attorney, I work hard to provide the latest information and the information shared is general in its nature and is no substitute for legal advise or opinion in any particular case.
As always, please feel free to contact me at the GHC Office if you have questions: Pambreenghc@gmail.com or 888-290-2229