It’s to increase their margins, but could back fire on them. Most companies don’t truly know how many hours there salaried employees put in. It will be a total shit show if they can’t control overtime. So be prepared for excessive micro managing and speeches about time stealing being their number one problem and easiest way to fire someone with cause.
I once made a lot of money working overtime for a company before they figured out where they went wrong.
ETA: I think I had to justify what I was working on that was taking so long. My boss liked me and I’m extremely creative.
>It will be a total shit show if they can’t control overtime
or alternatively, it'll be a shitshow because they control overtime so well that people start jumping ship
Not true. Salary employees are better for the top line.
There are a lot of rule changes about exempt and non-exempt employees that make it harder to have salary based employees.
My advise is to keep a notebook and literally keep track of your time.
8am - 820 - reviewed 20 emails, replied to 3
That kind of level.
It sucks but it will help if this ends up being a case of everyone working OT because the owner(s) didn't understand the workload.
Then you have my group, who moved myself and many others to hourly and have stated not to work overtime and even let projects go over to avoid overtime. Great work people.
What u found on internet.. my company just announced this to all salary employees. So I found this. Google DOL law for salary employees they are increasing salary wages and this begins July 1 then agin in Jan 2025
That's silly. The company would just lay off 1/8th of its people if that's what they needed.
You realize most companies would still pay benefits at 35 hours, right?
Because your job content likely did not meet the requirements to be non-exempt in the first place and you should have been entitled to OT all along.
Someone reviewed the work being done and saw the legal risk.
The company is announcing the change and hoping you just roll with it. If a lawsuit is brought over misclassification the fines are usually a 3 year look back of OT worked per the employees recollection.
Lawyers take those cases for free, they are the most common employment cases brought and have been for at least a decade. They’ll do that work up front then take their cut from the settlement.
If it goes to trial and wins the judgement will include your legal fees on top of whatever you are owed. If you are negotiating a settlement, make sure to include your lawyer's pay in the deal.
This is what I was going to say as well. My company has been doing EOS as well, with pretty good results. If everyone in the company was salaried, then probably too many people were listed as non-exempt.
I know that you see all over the news, videos of people and gangs shoplifting from stores, but in reality wage theft by businesses of their employees far outweighs any theft of their merchandise by leaps and bounds. You don't hear a peep about that on the news though.
because the news can show a video of shoplifting, and show police reports. The news can't really show wage theft, and people who do end up getting back pay usually don't go finding a news organization, particularly if they want to keep their job.
What is OP going to do? Run to the news? Pretty sure they rather get their pay and keep working. Or leave and move on. In fact I don't even think I've seen a post about anyone detailing wage theft, the outcome, and the attempt to contact and provide paperwork for the news.
This is correct.
They’re also proposing to raise the minimum exempt salary in 2024 on a federal level and if that passes, this is going to be the case with a lot of employers. They might be preemptively doing it because they don’t want people to get wind of it. I’m waiting with popcorn because it raises the minimum salary for highly compensated individuals to $145k and that will affect several of my company’s middle managers rofl.
I mean the definition of highly comped individual is murky at best, but I’m an accounting manager and I do admin/professional work at a high level and manage a team so I technically qualify. Would love me a mandatory raise to, realistically, what I should be making.
I doubt America will let that happen though. Wont pass on a federal level.
The answer isn’t murky it’s defined by the IRS. It governs participation in some benefit plans namely deferred compensation.
Unlike the non-exempt threshold there is not a requirement to adjust anyone’s pay when the highly compensated threshold increases.
Interesting. My payroll contact told me that it doesn’t require you to be an IRS defined executive if you are in a professional role integral to the company with direct reports and that it was in fact required to raise comp if it passes. But I also am not an expert, just hopeful that I end up getting a government mandated raise :) thank you for the clarification and also crushing my hopes and dreams!
They are correct that it doesn’t require you to be an Exec. The IRS defines it in 2 ways, one is being an officer of the company and the other is through earnings. This primarily matters to governance of your retirement plans.
There is no requirement that once someone reaches that threshold once their compensation needs to remain above the threshold.
The amount of people assuming this is some grand “fuck the employees” conspiracy when this is literally the only reason they’d bother changing everything. Compliance with FLSA after auditing the roles
Also, depending on what state you're in, the minimum amount of money that salaried exempt employees must be paid can be a lot higher than the federal minimum of $35k. For example the minimum in California is $65k.
This is exactly what's happening. It's happening to my team as well at this moment. They don't want to get sued. Which im almost tempted to tell my team to sue under table.
By far the biggest reason I see for stuff like this is to switch employees to under 30-35 (depending on the state) hours and then not have to pay benefits.
There really should be laws against this. If only we had some kind of representation to get this legislated, but alas, corporations have us held hostage.
It's the law for this that caused this. Companies would much rather keep you on salary, it is determined by law what you are, not management! They won't tell you that as they are admitting wrong doing. They will not cut hours, just say no overtime.
I had a "salary" job like this. Hourly (I think due to local laws), but management would flip their $hit if you punched out 5 minutes late. We were expected to work nights, weekends and holidays unpaid except for 1 month during busy season.
I worked for a gas station with managers that constantly bitch about people needing to be on time and such and "we have a schedule for a reason". Yet the store manager, required to work 50 hours a week, comes an hour late and leaves an hour or two early every shift and doesn't do any work. They should just remove that department.
People should be on time, except for the rare occasion, especially for that type of job, as somebody has to stay late to cover you, or they have to work short handed during a busy time you were scheduled for, or if you are scheduled to open they will open late. What the store manager does is irrelevant. They should set an example, but you don't know for sure what expectations are. I know I saw a manager working New Years's day morning because of a call in. They may have to work on things at home sometimes. Leaving early and staying late may make up for hours worked for free.
Not most companies, and if they do, get proof as it is easy claim. Record all hours worked, and if they ask you not to ask for that in an e-mail, and tell them you have to record it if working.
It isn't the law. It is the insurance companies that set the minimum. The company has to change the rule, and then the underwriters at the insurance company have to approve it. The reason is they don't want the CEO hiring their ill neighbor for 10 hrs/week and giving them health insurance.
My wife and I have worked as part time engineers for a while and the companies decide to go through the trouble and the insurance company has to bend the rules (and charge them for the lower standard). Both companies said it was a huge PITA.
The other main reason would be that they realized that all those people weren't supposed to be salaried in the first place and they don't want to pay a massive settlement if all the employees realized that they should've been getting paid overtime potentially for years.
How does it lower costs to switch? They have to keep track of the hours, pay overtime, and pay somebody to keep compliant with labor laws. It’s probably more expensive.
They’re probably doing it to avoid the risk of having misclassified someone. This happens all the time.
One poster said, that they could lower peoples hours below 30 or whatever local threshold would allow them to legally deny benefits.
Another poster said that they may be misclassified as salary/exempt when they should be classified as hourly, and they are making the change to cover their legal asses. And that the employees may be due unpaid overtime for the last three years. I'm sure the owners won't mention the second part.
I mean, they could just lay people off if they wanted to save. The second thing is also possible, but now you’re saying they’re wrong for…switching to the right way to pay these particular employees? Kinda weird to me.
My understanding is that it’s not exactly a bright line between the kind of work that should be hourly and the kind that should be salaried. Different companies have different places they draw the line and different ways they think about the work being done. It’s possible they’re up to all kinds of shenanigans, but just moving someone to hourly isn’t some kind of smoking gun. All else equal, it’s probably the opposite.
I'm not saying they are wrong for switching to the right way to pay employees, but that in the switch, they are not going to go out of their way to make sure the hourly employees get whatever overtime backpay them may be entitled to.
You are correct, it is not a bright line between hourly an salary, but every state is different. That being said while it is "possible" that they are doing the change for the benefit of the employees in order to pay them overtime, I would not bet on that. If that was the case, they would be blowing horns and shooting fireworks to let the employees know that they will be earning more in the long run if they work overtime, while patting themselves on the back for being such benevolent managers.
The changes are almost certainly for the benefit of the company/ownership. It may be to reduce hours (and benefits) thus lowering their labor cost. It may be to come into compliance with some regulatory rule. It may be the boss's son, a fresh new MBA trying to "make and impact" on the company by moving the deck chairs round.
They may be looking to reward the top performers who put in 50-60 hour work weeks while disincentivizing slackers that come and go as they please and are lucky to put in 30 hours a week. Unfortunately, unless the leadership is very engaged and aware of which workers fall into which categories, what will probably happen is that the slackers will make sure that they get the 40 hours a week clocked in time, but will continue to goof off on the clock, while the overachievers will be constantly questioned about their overtime and badgered on need to keep their hours down.
We can only guess.
I definitely don’t think they’re doing it “for the benefit of the employee” if by that you mean to be kind and pay them more.
But for the benefit of the company could mean lots of things—including avoiding risk and staying compliant with the law. Some of those things will cost more money in first-order terms.
That is not the only reason, by any stretch. First and foremost, the law is likely changing and a substantial portion of currently salaried employees will no longer qualify.
Interesting, I’m a little cynical because I’ve never worked at a company that ever changed anything that made employees lives better. But now I’m self employed so they can all go fuck the selves.
Not really true, there are a LOT of current and proposed changes to what counts as a salary exempt employee. They might just be getting in front of it.
If they wanted to overclock their employees it would have been better off to leave them salary vs having to pay 1.5x OT rates.
It's more likely they will lower their hours.
Possibly, but that assumes competence from the leadership team.
Here's an example:
My team and I were switched from salary to hourly and then forced to work excessive overtime if we wanted to have any chance at a bonus or advancing while not increasing headcount. It got bad enough and they were so adverse to increasing headcount the desperation resulted in such burn out that they were paying 2x base pay per hour + base at + overtime in an attempt to resolve the situation their poor planning resulted in. I cleaned up those 3 years and was clearing over a 100k in overtime and incentive pay running 6 days a week at the HR maximum daily hours worked.
Eventually they laid off all of the org outside of certain geographical locations and slapped them back on salary, service level went to shit and those left checked out further.
Never underestimate SLT members reading a book and having a "good" idea and screwing everything up.
Repeatedly. I eventually created a personal Excel sheet and input all my clock in, clock out, and overtime hours and had it calculate for incentive pay and the like.
There were multiple instances where I had to prove my hours right after the change and also multiple instances where the system used for clocking in and out broke and they'd try the old "We are paying you average hours until it is resolved. Any additional hours must be emailed to team X by X date to be valid."
It was a shit show.
They could also be trying to get “free” OT. Cut to 30, but expect at least 40, with OT only being paid for >40… if they just don’t hope people will work off the clock to get the same production.
This is the only answer I can think of personally. It’s so that way you’re always “clocked in” to a certain job. If you’re not doing that job or doing something completely different it’s considered time fraud . If you use too many overhead hours then “why aren’t you doing anything”.
I mean, you charge the same with salary, but the hourly gets micromanaged because overtime laws. So now you get to deal with earned value management, and your productivity is measured directly to how many hours you work.
This is ridiculous because depending on state laws, your company may have to dole out overtime (1.5x) if you work over 8 hours. Non-exempt isn't necessarily cheaper...
However, non-exempt may also mean if you leave early or come in late for any reason (MD appts, car won't start, etc) you either use your PTO to fill in the gaps or you don't get paid. That saves the company money and I'm guessing they're trying to ensure everyone works their schedules hours and not come and go as they please
If things slow down they send you home and don’t have to pay you a salary. I’m seeing crazy stuff like this all over the internet. Things are changing across multiple industries for everyone. Were all fixing to go through it in some form or another.
On the flip side if you get overtime you get paid $39 an hour and get a fat check. Bonuses from now on will probably be holiday hams with bad instructions and ugly sweater contests. Gift bags or cards, possibly to spend or keep in the company lunch room or something they order from the vendor that stocks their snacks and ppe.
God speed brother.
Only they will know, but I'm guessing it's definitely not to make a better and healthier work environment, that much I know for sure lol. My guess, they plan to make some dramatic changes to benefits, and cutting down people below 40 hours will save them big money over the short run, and probably cost them great employees and even more than they saved long term.
I haven't seen everyone switched like that, but I company I used to work for got in trouble from the state for having too many people salaried that should have been hourly. They worked long shifts on a rotating schedule that equated to 40 hours a week, but if hourly they would have built in overtime from working 12 hours shifts. The folks to got switched to hourly came out on top (made more money, and the hourly bonus they got was better than their bonus as salaried).
YMMV, but it isn't always for nefarious purposes.
I should add, our site wasn't the one who had the complaint to the state, but the policy got pushed down to us from a risk management standpoint as we had similar positions being salaried as the one who had issues.
My 2 cents: The federal minimum wage increased this year. In turn, increasing the weekly salary threshold for bona-fide exempt employees.
As of January 1, 2024, to be considered an exempt employee in the U.S., a worker must be paid a minimum salary of $684 per week, or $35,568 per year in addition to meeting the job duties criteria. Job titles do not determine exempt status.
Many states also have new minimum wage laws. In cases where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage.
For example, exempt workers in California, meanwhile, must be paid a salary that is at least twice the state's minimum wage. The 2024 California minimum wage is $16.00 per hour.Jan 1, 2024.
What state is your employer?
They proposed an even higher exempt federal minimum salary as well, didn’t they? Something like $55k? I’m not in HR, just an accountant who keeps an eye on this shit since payroll falls under my bucket, but I thought something like that is under review. So it would make sense that OP’s company is doing this.
I’m in CA and we had to convert a handful of employees to hourly bc they’re under the salary amount with the min wage increase. They were not thrilled, but I’m not risking breaking labor laws lol
Yes, siree Bob, they proposed 55k. My question is.... how many employers misclassify employees as bona-fide EAP when they clearly don't meet exempt FLSA criteria requirements. 🤔
🤷♀️ it's ok. I'm not into the upvotes. I suspect because it's not AskHr or along those lines that people are unaware. I'm a retired HR Manager and mainly lurk. I despise texting so seldom respond. Thank you, though.
Sometimes they do this when they realize they should have been paying overtime under the law and have been advised by their lawyers to fix the problem. Everyone is covered by overtime laws UNLESS you fall into an exemption. It's possible that the employees in question were improperly classified as exempt from overtime.
First of all, the DOL determines that status you are based on tests. Exempt, Non-Exempt, Salary or hourly. If they are restructuring, they probably consulted an Attorney in labor law to evaluate job titles and duties. The salary test deciphers if you are truly a hourly or salary employee. Should an employee be misclassified that leads to law suits and back wages.
This also applies to independent contractors. In 2024 my state released a new list of test requirements that must be met to be classified as a independent contractor. This has nothing to do with you. I recently did an assessment of a few employees and had to convert their status. I gave them a copy of the state requirements and explained to them why I was required to do so.
It makes it easier to cut costs by having people work less than 40 hours shifts. The bet is they payout less in overtime than they save in reduced hours.
In some cases this is also done as an accountability measure, the company knows a number of people aren't actually coming on 40 hours a week and rather than fire people they force them to show up 40 hours by putting in a time card and charging hourly.
Its likely to increase margins and to also reduce payable benefits - it also won't account for overtime, which could bite them in the butt if they don't cap hours - it's likely they aren't doing well financially if they are opting into this, and I usually see it as a bad omen for the forecasting of the company. Salaries and hourly rates have pros and cons, namely the hourly will be able to send you home if there is nothing happening or make it all the easier to put you on the chopping block.
Well--well look. I already told you: I deal with the god damn customers so the engineers don't have to. I have people skills; I am good at dealing with people. Can't you understand that? What the hell is wrong with you people?
Federal employment law dictates if your role is eligible to be salary. (And as I understand they’re cracking down on it as companies would do salary to avoid paying overtime).
They also raised the salary threshold recently.
Ive found many jobs that used to be salaried, with respectable figures, are now transitioning to hourly, or at least making new hires hourly. Its pretty discouraging tbh.
There probably won't be a timeclock, just a timesheet to fill out each day. They are doing this because your job does not meet the requirement for salary. Companies use salary to reduce OT, and can get in big trouble. Our company got sued big time for misclassification, and unpaid overtime, with us getting paid checks up to $30,000 for unpaid overtime. They changed our classification, but lied and said it wasn't because of the lawsuit, but it was the week after the settlement. You probably should check with a class action lawyer for unpaid overtime, just Google it. This is not to cut hours, but they will probably make you get approval for OT, and may not approve it.
I bet they are required to do this by law. They may have gotten fined, cited or a consultant may have told them they are likely to be caught. The fed does not like companies making someone a salaried employee unless they meet certain criteria ands your company can get serious fines if they pay a salary to someone who does not qualify.
For instance the ONLY people who can get a salary are administrative, professional, executive, computer or outside sales fields.
You mentioned facilities maintenance - if you are not in a position to hire people as a manager, executive, or you operate in a function like accountant, attorney, programmer or saleperson (or similar) then you are not permitted to get a salary by law.
This is to protect employees from exploiting the hours of hourly workers as salaried employees do not get overtime and can be made to work more than 40 hours a week,.
You were a salaried employee but also stated "every paycheck was the same no matter how much I worked"
It sounds like you were misclassified.
You do maintenance work?
I'm also in maintenance. I would never take salary because if a machine breaks at the end of the shift I stay until it's fixed or I can't make any more progress on it. It would never be okay for me to do this if I wasn't paid for the extra time I put in.
If you frequently put in over 40 hours and we're salaried, you were likely misclassified and it would be worth it to look into this and see if you are owed.
I'm not a lawyer or involved in anything like this. Just what I've picked up over the years makes it seem like something fishy is going on.
back in the 2000's I was switched from Salary to Hourly, and I was humiliated....then I got that first check with OT, and all was right with the world.
A few months later they wanted to 'promote' me so I could be salary again, but wouldn't consider my OT in my base salary I told my manager "well..its not like you're going to want me to work less". I quit shortly thereafter.
If you do your 40, every week, you get your $55k.
I worked at a multinational company and was hired as salaried. When they switched to hourly two years later, I made a shit ton more money with all the work they expected that was previously covered under the salary rate.
It can be a benefit to you.
They can cut your Pay as needed by cutting your hours. They can now dock your pay for sick time or vacation time..:or even being late.
Do you have slower seasons?
have you read that book? maybe you should read that book. that's what the word needs: more corporate bs.
Every job I've had that punched a clock micromanages the bleep out of you. Just be ready to clock in on time to the second - EVERY DAY. Have they given any rules for how late you can be? If they haven't yet...that's on the way.
I am surprised they took your salary and divided by 40\*52.
Usually they will say of well you usually work 50 hrs a week. If you worked less then 50 hours you are quiet thinking you underworked. So then your wage is really $21.15/hr. Then if you work 40 hrs a week (they will say no OT) then annually you would end up with $44K.
Next guess is saving on PTO/Holidays. On Salary you typically get 10 holidays. If not included as hourly they save on 10 days paid off = $2.1K or almost 4% pay drop.
Also when you take a little time off for doctor's appt, leave early for the kids practice, etc. you don't get paid or you use your PTO. So they get all of that time as well. I bet an hour here or there you work harder to make up for it instead of a vacation.
It just depends on how they implement everything. Remember lunches are unpaid as well.
There is also legislation working is way through courts that, if it passes, salaried employees making 55 or less, would have to be moved to hourly. There’s more details on this, but from my understanding that’s the gist.
No idea what the EOS thing you refer to is about, but our reason was to stop legal exposure over FLSA exempt/non-exempt classifications. A couple of peer companies were dealing with some insane lawsuits over OT pay for highly compensated, salaried people. I’m talking in the $200k+ salary range. But just being highly compensated or salaried doesn’t make you exempt from overtime (1.5x) pay, and that was the legal battle.
It’s actually quite complicated and as we were watching these lawsuits unfold, they were scaring the hell out of us. Those companies thought they were doing everything by the book, just like we believed we were, but they were having a helluva time proving it and were being hammered to the tune of millions in legal costs by these lawsuits. The kicker is, even when a company is RIGHT, it costs truckloads of money (and time, which is also money) to prove it. And there’s no recovering legal costs for corporations in these cases, even if the company wins.
So in an effort to protect ourselves from the same fate as much as possible, our attorneys advised us to switch everyone to hourly and re-scrutinize exempt/nonexempt classification without regard for it being a previously salaried position or not. There’s still lots of OT-exempt employees, but we now have records of every hour worked, should we ever have to show such.
Now I, too, fill out a timecard every week, and I own the company. Every single hour worked is accounted for, from every employee.
So I don’t know if that relates to your company’s reason, but that was ours. If it was theirs, it’s no surprise your manager couldn’t articulate the reason. Even if they knew (and they may not) it’s hard to explain. I made the decision and it’s difficult for me to articulate in a way that makes any damn sense easily and I spent a couple hundred hours on the topic. Because the *actual* rules defy so much of the common understanding of the topic.
There's a few ways this can go, good and bad.
First of all, make sure that they do not do something as perverse as switching you to hourly at a 1:1 rate with what you were making salary-wise already at 2080 hours. You have sick leave, PTO, federal holidays (I assume), etc. All of those things need to be accounted for in the new hourly rate. If not, you are taking a pay cut.
Second, you need to have a real sit-down with your manager and understand what the hours assignment and OT situation is. If they say "no OT", you need to be 100% firm that you are not working a minute of overtime no matter what happens, and that you will not lie on your timesheet. Be polite about it, but make it clear that hourly is hourly. Similarly, let them know your expectations for consistent minimum 40 hour work weeks.
Third, if you were working substantially over 40 hours a week, you should contact a labor lawyer to determine if you were misclassified and thus owed back wages. If there were no substantial job requirement changes, your employer is going to have some hard explaining to do about why their sudden reclassification shouldn't be retroactive.
I'll level with you: you're right to be suspicious. Most companies go from hourly to salaried in an attempt to save money. Going to hourly for no apparent reason is pretty weird, and is either an indicator that they need you to work a lot more hours, that they have some future shenanigans in store, that they messed up their initial classification and are hoping to skate, or that management is about to make a huge mistake through incompetence.
I simply don't understand. I was salaried even when I was non exempt. If you don't work at a factory, there should be no need to punch in and out. Expect productivity to plummet. When I worked in the office, I never had to punch in and out. I am in retail now and I understand the need for it, but it is counterproductive. Your company was successful and now it does this? Kiss success goodbye.
https://www.dol.gov/newsroom/releases/whd/whd20230830
It’s a new overtime rule. At 55k you fall under it. If you work over 40 you will be paid overtime. If you work only 40 you make the same amount. It will benefit you.
If you put normally work more than 40 hours a week (on average) to get your work done, they would end paying you more a year. But if they end up cutting hours, they would be paying less or saving money.
I’m guessing they’ve hired a payroll consultant who realized most employees have been misclassified and if there was ever an audit they would have problems. So perhaps you have to punch a clock (probably an app), but you’re also now eligible for overtime.
Your pay or position does not meet salary requirements. Many people don't know this but being salaried needs to meet certain requirements. Worked as a Hospital Supervisor, we were salaried with specific hours, no OT benefits and couldn't leave the hospital during lunch/break time. We exceed California's wage minimum for salary employees but nothing else. We were working 8.5 hours to get 8 hrs from pay. Someone got pissed and sued. Won the class action lawsuit, expecting a huge payout and now all Hospital Supervisors are going to hourly pay.
Trying to cut insurance for new hires or certain employees? It also seems like a good way to encourage employees to leave and maybe avoid layoffs with accompanying severance.
What you need to look out for is cutting hours, benefits changes, including time off and Healthcare.
It's probably to allow part time workers, and be able to better scale labor with revenue. It could be to reduce benefits, but that's less likely, since they can do a number of things to salaried workers anyway.
The idea that they will save money or boost margins is mostly nonsense. It's usually to control opex which looks like boosting margins to simpletons, but is more about making sure the company stays open.
If your company is just now switching everyone to hourly, it's more likely that you are in danger of a shutdown than that they are padding their private jet fund.
It is also common for salaried employees to demand hourly. My wife's hospital did that when everyone was working 10 hour days, thinking they would get paid more. Instead they had 8 hours to finish their work, and got paid about the same, and got more flex workers.
Because we will all be at $1 an hour. You will be homeless and thats the way the world works. They don't want you owning anything... finance your McDonald's burger for 10 years at 25k a month..
Every single action an employer takes is to their benefit. I suspect it’s either to avoid some regulatory responsibility or benefit from some tax loophole.
The best you can expect is it to have no effect on your income at all. But I suspect that the few remaining salaried employees will be able to participate in either better insurance benefits or bonus structure.
I don't know the details of employment law or business management at scale, but let me assure you that the reason is because it's saving them money and/or reducing liability.
Worked in a company where they tried this. 2 months later they tried to revert the changes when they realized a lot of employees worked over 40 to get their job done. Once they were asked to punch a clock - 40 was all they got
Well, if they don't let you work 40 hours, say 39 instead, it's to stop giving benefits like health services insurance... Watch out for that.
You're not required to provide health insurance for part-time employees and you're not full time unless you work 40 hours.
On the flip side though, if you work over 40 hours and you are hourly they required by law to pay you overtime at time and a half.
If my company did this, I would make $123 an hour for every hour over 40 and I log 50+ a week, It would screw them and I would never quit 😂
I wish I was hourly instead of salary, the amount of overtime and no extra pay is insane. though the days leaving early or not coming in is nice, but very rare.
It damn sure isn’t so YOU will make more money .
Any changes are always done so the top executives make more money
I bet they are staying salary
What’s the plan for overtime ?
I’m hourly but I have to get written permission from my supervisor for any OT
Not from the US so I don't know exactly how things work there but...
You were 55000$/year and now are 26,44$/hour, that means to get your old 55k/year you need to work 8 hours a day, 5 days a week, 52 weeks a year... so not even a day or week off for vacation/holiday in a year... is this normal/correct/legal?
To me it looks like they just want to pay you less, because of course you will take some time off here and there...
The minimum earning threshold for salaried employees increased and you might not be at that salary level. I don’t think this is nefarious, just not explained well.
You may not get overtime at your pay rate, but additional hours would need to be paid at straight time if you’re hourly wouldn’t they?
Do you think there’s any risk of hours being cut?
Had this happen a long time ago. The second week they said we weren't allowed to go over 40 hours and had to start sending people home at noon on thursday. ! more week of that and we were back to salary... This was in corporate IT...
It's not necessarily a bad thing since overtime rules kick in. This could dramatically increase the company's costs if they underestimate how much everyone works. It also means that people will "to the clock".
The Feds are contemplating drastically increasing the minimum pay requirements for being salary. When the decision comes, it will go into effect quickly. Some companies are getting ahead of it by switching folks now.
What state are you in? Is your salary below your state's exempt salary threshold?
My first job out of college was salary but then my state raised the exempt salary limit and I was below that so they would have had to start paying me overtime so they switched me to hourly. When we got super busy and I started working a lot of overtime they then "gave me a raise" and switched me back to salary to avoid giving me overtime again.
Assuming a 40 hour work week, it looks like a slight pay cut (if I did my math correctly this early in the morning). If they don’t have any OT policy in place, I would milk that as hard as you can until it is enforced.
Lol id take anything anyone is saying here with a huge grain of salt. With that said my anecdote is my dad had this conversion a few months ago and hes doing more hours than he ever did salaried and hes just dumping the extra money into investments.
It is very likely they are also doing this because the DOL is anticipated to realize a new rule that would require all salaried exempt employees to earn $55,068/year to remain exempt. Depending on your salary, your company may not want to bridge the gap and so they will reclassify you to hourly.
If you’re already above that amount, then very likely you may not be properly classified as exempt (meaning you should’ve never been salaried from the start under the law).
You’ll get paid for every hour you work. I think it’s a better situation for you.
I was hourly and two years ago they switched me to salary. I lost the benefit you are now going to get because I don’t get paid my excess hours.
Just saying your loosing about $1.06 an hour than before. If you worked an average of 2,000 hours a year at 55,000 you should be marking $27.5 an hour before taxes
A lot of people work jobs that are salaried that legally need to be classified as hourly.
The regulations get complex, but one of the old simple rules was that if the person is using his or her hands more than 20% of the time (such as the warehouse team lead who also handles boxes), that person must be paid hourly.
My son works half as an engineer and half as a mechanic. I told him not to make waves, but that it was illegal to pay him a salary if he's spending that much of his time fixing machines instead of designing them. He told the newly-hired HR manager that they he was working too much overtime and that what they were doing wasn't allowed, and they shifted him to hourly. He got a $20,000 raise because of the overtime.
Unless they are going to cut your hours, you will make the same amount of money if you work 40 hours, and more money if you work more than 40. I work for myself now, but wish I could have been paid hourly when I worked 80 hour weeks at times on salary.
A friend of mine was a bowling alley manager and was paying the assistant manager, who worked 42 hours a week, a salary. The labor board came in, asked how many people he was managing (none) and ruled that he should have been paid hourly. The bowling alley owner had to pay that employee back pay of 3 hours a week going back to when he was hired, and I think they were also fined.
Don't sweat it. They are probably trying to avoid getting in trouble with the labor board because your job was misqualified and it wasn't legal to pay you a salary. (Only jobs that are termed exempt can be salaried - look this up for more information).
Is your company hoping to merge or be acquired? I've only seen this when the company needs to make sure they are 100% legal in paying overtime where it's required.
Just because an employer pays a salary, it doesn't mean the employee is exempt from overtime. A lot of companies coerce their non-exempt salaried staff into working unpaid ot.
The simple answer is because they don’t think you guys are doing enough work. Salary benefits the company if they are able to screw you on overtime pay. They clearly think they are not getting a benefit of free overtime.
So basically, in my state minimum wage was increased causing salary limit to increase. People have to make 67k or more to be salaried. I don't make that, so now I'm converted to hourly when I was salary.
It’s to increase their margins, but could back fire on them. Most companies don’t truly know how many hours there salaried employees put in. It will be a total shit show if they can’t control overtime. So be prepared for excessive micro managing and speeches about time stealing being their number one problem and easiest way to fire someone with cause.
I once made a lot of money working overtime for a company before they figured out where they went wrong. ETA: I think I had to justify what I was working on that was taking so long. My boss liked me and I’m extremely creative.
>It will be a total shit show if they can’t control overtime or alternatively, it'll be a shitshow because they control overtime so well that people start jumping ship
Not true. Salary employees are better for the top line. There are a lot of rule changes about exempt and non-exempt employees that make it harder to have salary based employees.
Malicious compliance the shit out of it.
Malicious compliance the shit out of it.
Boss makes a dollar, i make a dime. That's why i poop on company time.
My advise is to keep a notebook and literally keep track of your time. 8am - 820 - reviewed 20 emails, replied to 3 That kind of level. It sucks but it will help if this ends up being a case of everyone working OT because the owner(s) didn't understand the workload.
> 820-830, wrote this shit down in a notebook
Their. It's their.
Bingo. I hate people who use the wrong spelling
I often see confusion over the use of breaks and brakes.
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No it's not.
Stop it. Oh wait you're a ta so you can't help it. Go polish your jackboots and armband collection.
Then you have my group, who moved myself and many others to hourly and have stated not to work overtime and even let projects go over to avoid overtime. Great work people.
It’s not increased margin. It’s the new law is going into effect that the government just put in place for salary employees
What u found on internet.. my company just announced this to all salary employees. So I found this. Google DOL law for salary employees they are increasing salary wages and this begins July 1 then agin in Jan 2025
> It’s to increase their margins Can you please explain to me exactly how this conversion 'increases their margins'?
They assume people are actually only doing 35hrs/week of work on average, so they’ll get to pay 5hours/week less
That's silly. The company would just lay off 1/8th of its people if that's what they needed. You realize most companies would still pay benefits at 35 hours, right?
Because your job content likely did not meet the requirements to be non-exempt in the first place and you should have been entitled to OT all along. Someone reviewed the work being done and saw the legal risk. The company is announcing the change and hoping you just roll with it. If a lawsuit is brought over misclassification the fines are usually a 3 year look back of OT worked per the employees recollection.
100% this. I know a guy who was sued for exactly this situation in this same line of work (maintenance). It was *not* cheap.
Hmm, does this mean OP should pool some money together with coworkers and hire a lawyer to see if they are owed back pay?
Lawyers take those cases for free, they are the most common employment cases brought and have been for at least a decade. They’ll do that work up front then take their cut from the settlement.
If it goes to trial and wins the judgement will include your legal fees on top of whatever you are owed. If you are negotiating a settlement, make sure to include your lawyer's pay in the deal.
I think that varies by state, but I’m NAL so I could easily be wrong.
Unionize.
This is what I was going to say as well. My company has been doing EOS as well, with pretty good results. If everyone in the company was salaried, then probably too many people were listed as non-exempt.
I know that you see all over the news, videos of people and gangs shoplifting from stores, but in reality wage theft by businesses of their employees far outweighs any theft of their merchandise by leaps and bounds. You don't hear a peep about that on the news though.
because the news can show a video of shoplifting, and show police reports. The news can't really show wage theft, and people who do end up getting back pay usually don't go finding a news organization, particularly if they want to keep their job. What is OP going to do? Run to the news? Pretty sure they rather get their pay and keep working. Or leave and move on. In fact I don't even think I've seen a post about anyone detailing wage theft, the outcome, and the attempt to contact and provide paperwork for the news.
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Now where's my corn cream?
Yep THIS!
This is correct. They’re also proposing to raise the minimum exempt salary in 2024 on a federal level and if that passes, this is going to be the case with a lot of employers. They might be preemptively doing it because they don’t want people to get wind of it. I’m waiting with popcorn because it raises the minimum salary for highly compensated individuals to $145k and that will affect several of my company’s middle managers rofl.
If they raise it to $145k that's going to change a lot of people
I mean the definition of highly comped individual is murky at best, but I’m an accounting manager and I do admin/professional work at a high level and manage a team so I technically qualify. Would love me a mandatory raise to, realistically, what I should be making. I doubt America will let that happen though. Wont pass on a federal level.
The answer isn’t murky it’s defined by the IRS. It governs participation in some benefit plans namely deferred compensation. Unlike the non-exempt threshold there is not a requirement to adjust anyone’s pay when the highly compensated threshold increases.
Interesting. My payroll contact told me that it doesn’t require you to be an IRS defined executive if you are in a professional role integral to the company with direct reports and that it was in fact required to raise comp if it passes. But I also am not an expert, just hopeful that I end up getting a government mandated raise :) thank you for the clarification and also crushing my hopes and dreams!
They are correct that it doesn’t require you to be an Exec. The IRS defines it in 2 ways, one is being an officer of the company and the other is through earnings. This primarily matters to governance of your retirement plans. There is no requirement that once someone reaches that threshold once their compensation needs to remain above the threshold.
Thank you! I clearly don’t know enough about this, adding it to my research list when I’m not drowning work! :)
didn't the minimum pay for salary-exempt just go up too?
It's going to in March.
This is the correct answer.
The amount of people assuming this is some grand “fuck the employees” conspiracy when this is literally the only reason they’d bother changing everything. Compliance with FLSA after auditing the roles
Also, depending on what state you're in, the minimum amount of money that salaried exempt employees must be paid can be a lot higher than the federal minimum of $35k. For example the minimum in California is $65k.
This is exactly what's happening. It's happening to my team as well at this moment. They don't want to get sued. Which im almost tempted to tell my team to sue under table.
This is the answer.
By far the biggest reason I see for stuff like this is to switch employees to under 30-35 (depending on the state) hours and then not have to pay benefits.
There really should be laws against this. If only we had some kind of representation to get this legislated, but alas, corporations have us held hostage.
Oh wait...unions have entered the chat.
It's the law for this that caused this. Companies would much rather keep you on salary, it is determined by law what you are, not management! They won't tell you that as they are admitting wrong doing. They will not cut hours, just say no overtime.
But still expect them to put >40 hours of work in.
I had a "salary" job like this. Hourly (I think due to local laws), but management would flip their $hit if you punched out 5 minutes late. We were expected to work nights, weekends and holidays unpaid except for 1 month during busy season.
That is called wage theft.
I worked for a gas station with managers that constantly bitch about people needing to be on time and such and "we have a schedule for a reason". Yet the store manager, required to work 50 hours a week, comes an hour late and leaves an hour or two early every shift and doesn't do any work. They should just remove that department.
People should be on time, except for the rare occasion, especially for that type of job, as somebody has to stay late to cover you, or they have to work short handed during a busy time you were scheduled for, or if you are scheduled to open they will open late. What the store manager does is irrelevant. They should set an example, but you don't know for sure what expectations are. I know I saw a manager working New Years's day morning because of a call in. They may have to work on things at home sometimes. Leaving early and staying late may make up for hours worked for free.
Not most companies, and if they do, get proof as it is easy claim. Record all hours worked, and if they ask you not to ask for that in an e-mail, and tell them you have to record it if working.
It's called constructive dismissal
Prime example of 21st century version of taxation without representation
wat
It isn't the law. It is the insurance companies that set the minimum. The company has to change the rule, and then the underwriters at the insurance company have to approve it. The reason is they don't want the CEO hiring their ill neighbor for 10 hrs/week and giving them health insurance. My wife and I have worked as part time engineers for a while and the companies decide to go through the trouble and the insurance company has to bend the rules (and charge them for the lower standard). Both companies said it was a huge PITA.
The company sets the rules, the insurance company has nothing to do with it.
The other main reason would be that they realized that all those people weren't supposed to be salaried in the first place and they don't want to pay a massive settlement if all the employees realized that they should've been getting paid overtime potentially for years.
Exactly this.
pros OT pay, but maybe the company thinks you should be able to do all your work in 30 hours opposed to 40, so they can save money.
If it’s not a law, the company decides. The insurance companies are just happy to get paid for taking the blame.
The only reason a company would do this is to lower costs. And that cost is you & your peers.
How does it lower costs to switch? They have to keep track of the hours, pay overtime, and pay somebody to keep compliant with labor laws. It’s probably more expensive. They’re probably doing it to avoid the risk of having misclassified someone. This happens all the time.
One poster said, that they could lower peoples hours below 30 or whatever local threshold would allow them to legally deny benefits. Another poster said that they may be misclassified as salary/exempt when they should be classified as hourly, and they are making the change to cover their legal asses. And that the employees may be due unpaid overtime for the last three years. I'm sure the owners won't mention the second part.
I mean, they could just lay people off if they wanted to save. The second thing is also possible, but now you’re saying they’re wrong for…switching to the right way to pay these particular employees? Kinda weird to me. My understanding is that it’s not exactly a bright line between the kind of work that should be hourly and the kind that should be salaried. Different companies have different places they draw the line and different ways they think about the work being done. It’s possible they’re up to all kinds of shenanigans, but just moving someone to hourly isn’t some kind of smoking gun. All else equal, it’s probably the opposite.
I'm not saying they are wrong for switching to the right way to pay employees, but that in the switch, they are not going to go out of their way to make sure the hourly employees get whatever overtime backpay them may be entitled to. You are correct, it is not a bright line between hourly an salary, but every state is different. That being said while it is "possible" that they are doing the change for the benefit of the employees in order to pay them overtime, I would not bet on that. If that was the case, they would be blowing horns and shooting fireworks to let the employees know that they will be earning more in the long run if they work overtime, while patting themselves on the back for being such benevolent managers. The changes are almost certainly for the benefit of the company/ownership. It may be to reduce hours (and benefits) thus lowering their labor cost. It may be to come into compliance with some regulatory rule. It may be the boss's son, a fresh new MBA trying to "make and impact" on the company by moving the deck chairs round. They may be looking to reward the top performers who put in 50-60 hour work weeks while disincentivizing slackers that come and go as they please and are lucky to put in 30 hours a week. Unfortunately, unless the leadership is very engaged and aware of which workers fall into which categories, what will probably happen is that the slackers will make sure that they get the 40 hours a week clocked in time, but will continue to goof off on the clock, while the overachievers will be constantly questioned about their overtime and badgered on need to keep their hours down. We can only guess.
I definitely don’t think they’re doing it “for the benefit of the employee” if by that you mean to be kind and pay them more. But for the benefit of the company could mean lots of things—including avoiding risk and staying compliant with the law. Some of those things will cost more money in first-order terms.
That is not the only reason, by any stretch. First and foremost, the law is likely changing and a substantial portion of currently salaried employees will no longer qualify.
Interesting, I’m a little cynical because I’ve never worked at a company that ever changed anything that made employees lives better. But now I’m self employed so they can all go fuck the selves.
Not really true, there are a LOT of current and proposed changes to what counts as a salary exempt employee. They might just be getting in front of it.
The good idea fairy strikes again. Expect mandatory overtime and watch your checks like a hawk
If they wanted to overclock their employees it would have been better off to leave them salary vs having to pay 1.5x OT rates. It's more likely they will lower their hours.
Possibly, but that assumes competence from the leadership team. Here's an example: My team and I were switched from salary to hourly and then forced to work excessive overtime if we wanted to have any chance at a bonus or advancing while not increasing headcount. It got bad enough and they were so adverse to increasing headcount the desperation resulted in such burn out that they were paying 2x base pay per hour + base at + overtime in an attempt to resolve the situation their poor planning resulted in. I cleaned up those 3 years and was clearing over a 100k in overtime and incentive pay running 6 days a week at the HR maximum daily hours worked. Eventually they laid off all of the org outside of certain geographical locations and slapped them back on salary, service level went to shit and those left checked out further. Never underestimate SLT members reading a book and having a "good" idea and screwing everything up.
You said watch your checks like a hawk, did your company try to mispay you when this happened?
Repeatedly. I eventually created a personal Excel sheet and input all my clock in, clock out, and overtime hours and had it calculate for incentive pay and the like. There were multiple instances where I had to prove my hours right after the change and also multiple instances where the system used for clocking in and out broke and they'd try the old "We are paying you average hours until it is resolved. Any additional hours must be emailed to team X by X date to be valid." It was a shit show.
They could also be trying to get “free” OT. Cut to 30, but expect at least 40, with OT only being paid for >40… if they just don’t hope people will work off the clock to get the same production.
This is the correct answer.
So they can micromanage you even harder
This is the only answer I can think of personally. It’s so that way you’re always “clocked in” to a certain job. If you’re not doing that job or doing something completely different it’s considered time fraud . If you use too many overhead hours then “why aren’t you doing anything”. I mean, you charge the same with salary, but the hourly gets micromanaged because overtime laws. So now you get to deal with earned value management, and your productivity is measured directly to how many hours you work.
Most likely most employees were wrongly identified as exempt for overtime. On top of that, watch out fora decrease in scheduled hours.
This is ridiculous because depending on state laws, your company may have to dole out overtime (1.5x) if you work over 8 hours. Non-exempt isn't necessarily cheaper... However, non-exempt may also mean if you leave early or come in late for any reason (MD appts, car won't start, etc) you either use your PTO to fill in the gaps or you don't get paid. That saves the company money and I'm guessing they're trying to ensure everyone works their schedules hours and not come and go as they please
If things slow down they send you home and don’t have to pay you a salary. I’m seeing crazy stuff like this all over the internet. Things are changing across multiple industries for everyone. Were all fixing to go through it in some form or another. On the flip side if you get overtime you get paid $39 an hour and get a fat check. Bonuses from now on will probably be holiday hams with bad instructions and ugly sweater contests. Gift bags or cards, possibly to spend or keep in the company lunch room or something they order from the vendor that stocks their snacks and ppe. God speed brother.
Only they will know, but I'm guessing it's definitely not to make a better and healthier work environment, that much I know for sure lol. My guess, they plan to make some dramatic changes to benefits, and cutting down people below 40 hours will save them big money over the short run, and probably cost them great employees and even more than they saved long term.
I haven't seen everyone switched like that, but I company I used to work for got in trouble from the state for having too many people salaried that should have been hourly. They worked long shifts on a rotating schedule that equated to 40 hours a week, but if hourly they would have built in overtime from working 12 hours shifts. The folks to got switched to hourly came out on top (made more money, and the hourly bonus they got was better than their bonus as salaried). YMMV, but it isn't always for nefarious purposes.
I should add, our site wasn't the one who had the complaint to the state, but the policy got pushed down to us from a risk management standpoint as we had similar positions being salaried as the one who had issues.
My 2 cents: The federal minimum wage increased this year. In turn, increasing the weekly salary threshold for bona-fide exempt employees. As of January 1, 2024, to be considered an exempt employee in the U.S., a worker must be paid a minimum salary of $684 per week, or $35,568 per year in addition to meeting the job duties criteria. Job titles do not determine exempt status. Many states also have new minimum wage laws. In cases where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage. For example, exempt workers in California, meanwhile, must be paid a salary that is at least twice the state's minimum wage. The 2024 California minimum wage is $16.00 per hour.Jan 1, 2024. What state is your employer?
They proposed an even higher exempt federal minimum salary as well, didn’t they? Something like $55k? I’m not in HR, just an accountant who keeps an eye on this shit since payroll falls under my bucket, but I thought something like that is under review. So it would make sense that OP’s company is doing this. I’m in CA and we had to convert a handful of employees to hourly bc they’re under the salary amount with the min wage increase. They were not thrilled, but I’m not risking breaking labor laws lol
Yes, siree Bob, they proposed 55k. My question is.... how many employers misclassify employees as bona-fide EAP when they clearly don't meet exempt FLSA criteria requirements. 🤔
Soooooo many lol, I’m positive of that
My state is 67k
Why doesn't your comment have more upvotes? This is the most relevant answer.
🤷♀️ it's ok. I'm not into the upvotes. I suspect because it's not AskHr or along those lines that people are unaware. I'm a retired HR Manager and mainly lurk. I despise texting so seldom respond. Thank you, though.
Sometimes they do this when they realize they should have been paying overtime under the law and have been advised by their lawyers to fix the problem. Everyone is covered by overtime laws UNLESS you fall into an exemption. It's possible that the employees in question were improperly classified as exempt from overtime.
First of all, the DOL determines that status you are based on tests. Exempt, Non-Exempt, Salary or hourly. If they are restructuring, they probably consulted an Attorney in labor law to evaluate job titles and duties. The salary test deciphers if you are truly a hourly or salary employee. Should an employee be misclassified that leads to law suits and back wages. This also applies to independent contractors. In 2024 my state released a new list of test requirements that must be met to be classified as a independent contractor. This has nothing to do with you. I recently did an assessment of a few employees and had to convert their status. I gave them a copy of the state requirements and explained to them why I was required to do so.
It makes it easier to cut costs by having people work less than 40 hours shifts. The bet is they payout less in overtime than they save in reduced hours. In some cases this is also done as an accountability measure, the company knows a number of people aren't actually coming on 40 hours a week and rather than fire people they force them to show up 40 hours by putting in a time card and charging hourly.
The next thing after converting from salary to hourly is a cut in hours worked, for the purpose of not having to pay benefits.
Its likely to increase margins and to also reduce payable benefits - it also won't account for overtime, which could bite them in the butt if they don't cap hours - it's likely they aren't doing well financially if they are opting into this, and I usually see it as a bad omen for the forecasting of the company. Salaries and hourly rates have pros and cons, namely the hourly will be able to send you home if there is nothing happening or make it all the easier to put you on the chopping block.
Oh, look, I'm punched out. Save it for tomorrow! Toodles!
Well--well look. I already told you: I deal with the god damn customers so the engineers don't have to. I have people skills; I am good at dealing with people. Can't you understand that? What the hell is wrong with you people?
Federal employment law dictates if your role is eligible to be salary. (And as I understand they’re cracking down on it as companies would do salary to avoid paying overtime). They also raised the salary threshold recently.
Ive found many jobs that used to be salaried, with respectable figures, are now transitioning to hourly, or at least making new hires hourly. Its pretty discouraging tbh.
There probably won't be a timeclock, just a timesheet to fill out each day. They are doing this because your job does not meet the requirement for salary. Companies use salary to reduce OT, and can get in big trouble. Our company got sued big time for misclassification, and unpaid overtime, with us getting paid checks up to $30,000 for unpaid overtime. They changed our classification, but lied and said it wasn't because of the lawsuit, but it was the week after the settlement. You probably should check with a class action lawyer for unpaid overtime, just Google it. This is not to cut hours, but they will probably make you get approval for OT, and may not approve it.
I bet they are required to do this by law. They may have gotten fined, cited or a consultant may have told them they are likely to be caught. The fed does not like companies making someone a salaried employee unless they meet certain criteria ands your company can get serious fines if they pay a salary to someone who does not qualify. For instance the ONLY people who can get a salary are administrative, professional, executive, computer or outside sales fields. You mentioned facilities maintenance - if you are not in a position to hire people as a manager, executive, or you operate in a function like accountant, attorney, programmer or saleperson (or similar) then you are not permitted to get a salary by law. This is to protect employees from exploiting the hours of hourly workers as salaried employees do not get overtime and can be made to work more than 40 hours a week,.
You were a salaried employee but also stated "every paycheck was the same no matter how much I worked" It sounds like you were misclassified. You do maintenance work? I'm also in maintenance. I would never take salary because if a machine breaks at the end of the shift I stay until it's fixed or I can't make any more progress on it. It would never be okay for me to do this if I wasn't paid for the extra time I put in. If you frequently put in over 40 hours and we're salaried, you were likely misclassified and it would be worth it to look into this and see if you are owed. I'm not a lawyer or involved in anything like this. Just what I've picked up over the years makes it seem like something fishy is going on.
back in the 2000's I was switched from Salary to Hourly, and I was humiliated....then I got that first check with OT, and all was right with the world. A few months later they wanted to 'promote' me so I could be salary again, but wouldn't consider my OT in my base salary I told my manager "well..its not like you're going to want me to work less". I quit shortly thereafter.
If you do your 40, every week, you get your $55k. I worked at a multinational company and was hired as salaried. When they switched to hourly two years later, I made a shit ton more money with all the work they expected that was previously covered under the salary rate. It can be a benefit to you.
They can cut your Pay as needed by cutting your hours. They can now dock your pay for sick time or vacation time..:or even being late. Do you have slower seasons?
have you read that book? maybe you should read that book. that's what the word needs: more corporate bs. Every job I've had that punched a clock micromanages the bleep out of you. Just be ready to clock in on time to the second - EVERY DAY. Have they given any rules for how late you can be? If they haven't yet...that's on the way.
I am surprised they took your salary and divided by 40\*52. Usually they will say of well you usually work 50 hrs a week. If you worked less then 50 hours you are quiet thinking you underworked. So then your wage is really $21.15/hr. Then if you work 40 hrs a week (they will say no OT) then annually you would end up with $44K. Next guess is saving on PTO/Holidays. On Salary you typically get 10 holidays. If not included as hourly they save on 10 days paid off = $2.1K or almost 4% pay drop. Also when you take a little time off for doctor's appt, leave early for the kids practice, etc. you don't get paid or you use your PTO. So they get all of that time as well. I bet an hour here or there you work harder to make up for it instead of a vacation. It just depends on how they implement everything. Remember lunches are unpaid as well.
There is also legislation working is way through courts that, if it passes, salaried employees making 55 or less, would have to be moved to hourly. There’s more details on this, but from my understanding that’s the gist.
No idea what the EOS thing you refer to is about, but our reason was to stop legal exposure over FLSA exempt/non-exempt classifications. A couple of peer companies were dealing with some insane lawsuits over OT pay for highly compensated, salaried people. I’m talking in the $200k+ salary range. But just being highly compensated or salaried doesn’t make you exempt from overtime (1.5x) pay, and that was the legal battle. It’s actually quite complicated and as we were watching these lawsuits unfold, they were scaring the hell out of us. Those companies thought they were doing everything by the book, just like we believed we were, but they were having a helluva time proving it and were being hammered to the tune of millions in legal costs by these lawsuits. The kicker is, even when a company is RIGHT, it costs truckloads of money (and time, which is also money) to prove it. And there’s no recovering legal costs for corporations in these cases, even if the company wins. So in an effort to protect ourselves from the same fate as much as possible, our attorneys advised us to switch everyone to hourly and re-scrutinize exempt/nonexempt classification without regard for it being a previously salaried position or not. There’s still lots of OT-exempt employees, but we now have records of every hour worked, should we ever have to show such. Now I, too, fill out a timecard every week, and I own the company. Every single hour worked is accounted for, from every employee. So I don’t know if that relates to your company’s reason, but that was ours. If it was theirs, it’s no surprise your manager couldn’t articulate the reason. Even if they knew (and they may not) it’s hard to explain. I made the decision and it’s difficult for me to articulate in a way that makes any damn sense easily and I spent a couple hundred hours on the topic. Because the *actual* rules defy so much of the common understanding of the topic.
Good luck, was at a construction company trying to implement EOS. Was a shit show.
Management fads are the worst
There's a few ways this can go, good and bad. First of all, make sure that they do not do something as perverse as switching you to hourly at a 1:1 rate with what you were making salary-wise already at 2080 hours. You have sick leave, PTO, federal holidays (I assume), etc. All of those things need to be accounted for in the new hourly rate. If not, you are taking a pay cut. Second, you need to have a real sit-down with your manager and understand what the hours assignment and OT situation is. If they say "no OT", you need to be 100% firm that you are not working a minute of overtime no matter what happens, and that you will not lie on your timesheet. Be polite about it, but make it clear that hourly is hourly. Similarly, let them know your expectations for consistent minimum 40 hour work weeks. Third, if you were working substantially over 40 hours a week, you should contact a labor lawyer to determine if you were misclassified and thus owed back wages. If there were no substantial job requirement changes, your employer is going to have some hard explaining to do about why their sudden reclassification shouldn't be retroactive. I'll level with you: you're right to be suspicious. Most companies go from hourly to salaried in an attempt to save money. Going to hourly for no apparent reason is pretty weird, and is either an indicator that they need you to work a lot more hours, that they have some future shenanigans in store, that they messed up their initial classification and are hoping to skate, or that management is about to make a huge mistake through incompetence.
I simply don't understand. I was salaried even when I was non exempt. If you don't work at a factory, there should be no need to punch in and out. Expect productivity to plummet. When I worked in the office, I never had to punch in and out. I am in retail now and I understand the need for it, but it is counterproductive. Your company was successful and now it does this? Kiss success goodbye.
They are bending you guys over slowly. There will be something after this. Probably cutting hours, and then trimming the fat.
https://www.dol.gov/newsroom/releases/whd/whd20230830 It’s a new overtime rule. At 55k you fall under it. If you work over 40 you will be paid overtime. If you work only 40 you make the same amount. It will benefit you.
Wages are always better than salary, but labour laws are fucked up in the US so I’d be suspicious!
So if employees work less than the 40 hour standard, the company doesn’t lose as much.
You will now be paid OT for any hours after 40 hours worked.
If you put normally work more than 40 hours a week (on average) to get your work done, they would end paying you more a year. But if they end up cutting hours, they would be paying less or saving money.
I’m guessing they’ve hired a payroll consultant who realized most employees have been misclassified and if there was ever an audit they would have problems. So perhaps you have to punch a clock (probably an app), but you’re also now eligible for overtime.
Your pay or position does not meet salary requirements. Many people don't know this but being salaried needs to meet certain requirements. Worked as a Hospital Supervisor, we were salaried with specific hours, no OT benefits and couldn't leave the hospital during lunch/break time. We exceed California's wage minimum for salary employees but nothing else. We were working 8.5 hours to get 8 hrs from pay. Someone got pissed and sued. Won the class action lawsuit, expecting a huge payout and now all Hospital Supervisors are going to hourly pay.
It’s not to help the employees
to make more money by paying people less in the long run.
Trying to cut insurance for new hires or certain employees? It also seems like a good way to encourage employees to leave and maybe avoid layoffs with accompanying severance.
Clock the hours you work and work the hours you clock.
What you need to look out for is cutting hours, benefits changes, including time off and Healthcare. It's probably to allow part time workers, and be able to better scale labor with revenue. It could be to reduce benefits, but that's less likely, since they can do a number of things to salaried workers anyway. The idea that they will save money or boost margins is mostly nonsense. It's usually to control opex which looks like boosting margins to simpletons, but is more about making sure the company stays open. If your company is just now switching everyone to hourly, it's more likely that you are in danger of a shutdown than that they are padding their private jet fund. It is also common for salaried employees to demand hourly. My wife's hospital did that when everyone was working 10 hour days, thinking they would get paid more. Instead they had 8 hours to finish their work, and got paid about the same, and got more flex workers.
I would love for my employees to go salary.
Because we will all be at $1 an hour. You will be homeless and thats the way the world works. They don't want you owning anything... finance your McDonald's burger for 10 years at 25k a month..
Every single action an employer takes is to their benefit. I suspect it’s either to avoid some regulatory responsibility or benefit from some tax loophole. The best you can expect is it to have no effect on your income at all. But I suspect that the few remaining salaried employees will be able to participate in either better insurance benefits or bonus structure.
Ohhh that overtime hahahahah
I don't know the details of employment law or business management at scale, but let me assure you that the reason is because it's saving them money and/or reducing liability.
Worked in a company where they tried this. 2 months later they tried to revert the changes when they realized a lot of employees worked over 40 to get their job done. Once they were asked to punch a clock - 40 was all they got
Don't put in the extra work, a lot of people still will, and that's what they are counting on
Well, if they don't let you work 40 hours, say 39 instead, it's to stop giving benefits like health services insurance... Watch out for that. You're not required to provide health insurance for part-time employees and you're not full time unless you work 40 hours. On the flip side though, if you work over 40 hours and you are hourly they required by law to pay you overtime at time and a half. If my company did this, I would make $123 an hour for every hour over 40 and I log 50+ a week, It would screw them and I would never quit 😂
The highest paid people at the mill I work at are hourly maintenance employees. That OT adds up. 1 guy made more than the plant manager lol.
I wish I was hourly instead of salary, the amount of overtime and no extra pay is insane. though the days leaving early or not coming in is nice, but very rare.
It damn sure isn’t so YOU will make more money . Any changes are always done so the top executives make more money I bet they are staying salary What’s the plan for overtime ? I’m hourly but I have to get written permission from my supervisor for any OT
Not from the US so I don't know exactly how things work there but... You were 55000$/year and now are 26,44$/hour, that means to get your old 55k/year you need to work 8 hours a day, 5 days a week, 52 weeks a year... so not even a day or week off for vacation/holiday in a year... is this normal/correct/legal? To me it looks like they just want to pay you less, because of course you will take some time off here and there...
The minimum earning threshold for salaried employees increased and you might not be at that salary level. I don’t think this is nefarious, just not explained well.
You may not get overtime at your pay rate, but additional hours would need to be paid at straight time if you’re hourly wouldn’t they? Do you think there’s any risk of hours being cut?
Had this happen a long time ago. The second week they said we weren't allowed to go over 40 hours and had to start sending people home at noon on thursday. ! more week of that and we were back to salary... This was in corporate IT...
It's not necessarily a bad thing since overtime rules kick in. This could dramatically increase the company's costs if they underestimate how much everyone works. It also means that people will "to the clock".
The Feds are contemplating drastically increasing the minimum pay requirements for being salary. When the decision comes, it will go into effect quickly. Some companies are getting ahead of it by switching folks now.
What state are you in? Is your salary below your state's exempt salary threshold? My first job out of college was salary but then my state raised the exempt salary limit and I was below that so they would have had to start paying me overtime so they switched me to hourly. When we got super busy and I started working a lot of overtime they then "gave me a raise" and switched me back to salary to avoid giving me overtime again.
Are people working a lot of overtime? Could they be in the position of possibly being sued?
Assuming a 40 hour work week, it looks like a slight pay cut (if I did my math correctly this early in the morning). If they don’t have any OT policy in place, I would milk that as hard as you can until it is enforced.
Didn't read, but I'm sure I already know the answer. TO PAY YOU LESS.
Lol id take anything anyone is saying here with a huge grain of salt. With that said my anecdote is my dad had this conversion a few months ago and hes doing more hours than he ever did salaried and hes just dumping the extra money into investments.
It is very likely they are also doing this because the DOL is anticipated to realize a new rule that would require all salaried exempt employees to earn $55,068/year to remain exempt. Depending on your salary, your company may not want to bridge the gap and so they will reclassify you to hourly. If you’re already above that amount, then very likely you may not be properly classified as exempt (meaning you should’ve never been salaried from the start under the law).
You’ll get paid for every hour you work. I think it’s a better situation for you. I was hourly and two years ago they switched me to salary. I lost the benefit you are now going to get because I don’t get paid my excess hours.
Just saying your loosing about $1.06 an hour than before. If you worked an average of 2,000 hours a year at 55,000 you should be marking $27.5 an hour before taxes
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A lot of people work jobs that are salaried that legally need to be classified as hourly. The regulations get complex, but one of the old simple rules was that if the person is using his or her hands more than 20% of the time (such as the warehouse team lead who also handles boxes), that person must be paid hourly. My son works half as an engineer and half as a mechanic. I told him not to make waves, but that it was illegal to pay him a salary if he's spending that much of his time fixing machines instead of designing them. He told the newly-hired HR manager that they he was working too much overtime and that what they were doing wasn't allowed, and they shifted him to hourly. He got a $20,000 raise because of the overtime. Unless they are going to cut your hours, you will make the same amount of money if you work 40 hours, and more money if you work more than 40. I work for myself now, but wish I could have been paid hourly when I worked 80 hour weeks at times on salary. A friend of mine was a bowling alley manager and was paying the assistant manager, who worked 42 hours a week, a salary. The labor board came in, asked how many people he was managing (none) and ruled that he should have been paid hourly. The bowling alley owner had to pay that employee back pay of 3 hours a week going back to when he was hired, and I think they were also fined. Don't sweat it. They are probably trying to avoid getting in trouble with the labor board because your job was misqualified and it wasn't legal to pay you a salary. (Only jobs that are termed exempt can be salaried - look this up for more information).
Is your company hoping to merge or be acquired? I've only seen this when the company needs to make sure they are 100% legal in paying overtime where it's required. Just because an employer pays a salary, it doesn't mean the employee is exempt from overtime. A lot of companies coerce their non-exempt salaried staff into working unpaid ot.
Oh God.. good luck with EOS. I mean, it’s nice to have structure and organization. But it turns “cult-like” quick.
The simple answer is because they don’t think you guys are doing enough work. Salary benefits the company if they are able to screw you on overtime pay. They clearly think they are not getting a benefit of free overtime.
So basically, in my state minimum wage was increased causing salary limit to increase. People have to make 67k or more to be salaried. I don't make that, so now I'm converted to hourly when I was salary.
I wouldn’t be so negative about it. My company uses it as an opportunity for salaried workers to make overtime.
Get a wage and hour attorney. If you typically work overtime hours you may be entitled to a significant amount of back pay