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FLSA morale nightmare: Dealing with the “new non-exempt”

by Robin Shea, Attorney
Constangy, Brooks, Smith and Prophete, LLC
First Published in the Employment and Labor Insider blog

Monster Image

C’mon, I was on a roll!

My first job out of college was as a non-exempt clerical, and I wasn’t a very “good fit.” The work aside, I chafed at the rigid rules about start times-stop times-breaks-lunch hours-quitting times. If there was some work that I wanted to finish up and it was “lunch time,” I couldn’t take the extra 15 minutes needed to get it done. I had to stop right then and there, and go to lunch, or at least stop working. I couldn’t start early or stay late, even if I was on a roll.

Well, come December 1, you can take my experience and multiply it by 4.2 million, the number of currently exempt workers in the United States who, according to the Obama Administration, will now become non-exempt under the Final Rule on white-collar exemptions under the Fair Labor Standards Act.

But isn’t becoming non-exempt a good thing? Because now these workers will get overtime whenever they work more than 40 hours in a week?

Yes, they will be eligible for overtime, but that won’t not necessarily be viewed as a net “positive.” Studies have shown that many exempt employees who are reclassified to non-exempt view it as a negative change in status equivalent to a demotion. Some may have cuts in their rates of pay to allow the employer to pay overtime without paying more in real dollars. Some may be prohibited from working overtime — in other words, getting all the “penalty” (loss of status) and no reward (overtime pay). Some may lose their flexibility in hours, or their ability to work from home. In addition, the obligation to track their time will be viewed by them (as well as their employers) as a new administrative headache.

In short, the mass reclassification that will have to take effect by December 1 has the makings for an employee morale nightmare.

Here are a few tips for employers to make the transition to “new non-exempt” less painful for the affected employees:

DO let the employees know that the reclassification was the government’s doing, not yours. This was required by a change in the law. It wasn’t your idea, and it’s not because of any fault on the part of the reclassified employees. Make sure that your new non-exempts know that they are still valued just as much as before. If your decision as a company is not only to reclassify your exempt employees but also to cut their rates of pay or to take away their flexibility, expect to have to work even harder to overcome their feelings of being devalued.

DO provide training on the many timekeeping issues that they haven’t had to worry about for a long time, if ever. If you decide to let them keep their flexibility, they’ll have to understand the importance of accurately documenting their time worked – even if it’s something as “trivial” as taking a business call in the car on the way to work or answering some emails in the evening at home. This is a very hard habit to start.

 

Photo from The Shining

“I have to track my time now? Redrum! Redrum!”

 

DO get across that you really, truly don’t want them to “help” you by working and not posting the time. Many new non-exempt employees are going to think, “Rules, schmules, I’m going to do what’s necessary to get the job done. I just won’t put down that extra time, and no one will be the wiser.” You’ll have to persuade the new non-exempt employees that, yes, you really do want them to accurately post all hours worked — including those “do what it takes” hours. Train employees and their supervisors on this, and reiterate as often as necessary. Low-key, friendly reminders are helpful, too. For example, if you know that a new non-exempt worked through lunch on a project, tell him right then and there, “Be sure you include this extra hour on your time for this week.” It may take a while before employees start believing that you really want them to record all of their work time.

DON’T let the “new non-exempt” take off in the middle of the work day for personal stuff (or coming in late or leaving early) without accurately posting that. This is the other side of the “new non-exempt” coin. Many exempt employees are used to having the freedom to be late getting into the office, to take off in the middle of the day to go to their kids’ soccer games, or to leave early once in a while. No big deal, as long as the work gets done, right? Not anymore. If want to let your new non-exempt employees be flexible, that’s great, but they’ll need to accurately record their non-working time, too. (NOTE: If they’re being paid according to the fluctuating workweek method, then you’d normally have to pay them for a full week if they worked any time during that week unless the time off was covered by PTO.)

 

Halloween toys

“We are the DOL travel time rules! Bwahahahah!”

 

DO learn the FLSA overnight travel rules because you’ll need to apply them. The rules during the workday are relatively simple: Commuting time (between home and workplace) is generally not compensable unless work is performed, but all travel time that occurs “in a day’s work” (between worksites) is covered, even if no actual “tasks” are performed. Travel time between home and an off-site assignment may be at least partially compensable, depending on the length of the trip.

But if your new non-exempt has to go out of town overnight, then all kinds of crazy rules apply. Make sure you know them.

Reassure, Review, Reiterate, and Repeat

The December 1 transition won’t be easy for employers, for a lot of reasons. But it will go a little more smoothly if employers remember to Reassure, Review, Reiterate, and Repeat to avoid the morale fallout that is otherwise likely to occur when exempt employees become new non-exempts.

Image Credits: From flickr, Creative Commons license. Nightmare monster by Phillip Sidek, Danny from The Shining (1980) by Felipe Pizarro, bunch of monsters by kwan kwan.


 

Learn more about the new Fair Labor Standards Act ruling and what to do to avoid penalties and fines by attending Employment Law Essentials and Hot Topics: What to Expect in 2016 and Beyond, a workshop scheduled for July 15, 2016. Attorneys Jonathan Martin and Jeff Thompson will provide comprehensive overview of current legal and regulatory issues and topics including the FLSA changes. The workshop is part of the HR Certificate program, co-sponsored by GEA and SHRM Middle Georgia Chapter 154. Click the link to read more about the workshop and the HR Certificate Series.

A Fowl Story: What HR can learn from the New Marketing

Smart Marketing

It’s a funny and educational tale that carries a positive message along with just a bit of bird scatology. The story starts with a series of negative Tweets focused on the diminutive Smart Car. The micro mobile had become the butt of jokes on the Twitter social network, but the company (Smart USA) decided to turn it to their advantage. Then the perfect Tweet came along:

 

Smartcar Tweet

 

The company’s response was nothing short of classic. Smart USA did the math, based upon the engineering specifications of their sturdy automotive frame. Here’s their response:

 

If you’d like to read the rest of the story and don’t mind a bit of fowl (pun intended) language, here’s a link to the Case Study The point is clear – Smart USA was listening, and responded in a very proactive way.

Connecting the Splots

The Smart story is about marketing, but there are some great takeaways for HR, too. The idea that there are connections between marketing strategies and HR strategies is beginning to dawn on both communities. On the marketing side, new age guru Seth Godin has chimed in, suggesting that it’s time Human Resources abandons it’s “forms/clerical/factory” focus and it’s view of employees as a commodity. His idea is simple . . . it’s the people that count. He suggests that the name of the HR department should change to “Talent.” On the HR side, there’s an ongoing discussion of “employment branding,” essentially the idea that company reputation counts when it comes to recruiting and keeping the best employees.

From the marketer’s perspective, the connections are relevant and mostly self-evident. Here’s the aspect that’s not often considered – both marketers and human resource managers are playing on a changing field.  A recent Adobe survey of marketers found that 76% agreed that marketing has changed more in the last two years than in the previous 50.  For marketers, outbound advertising has become much more difficult. Overt sales messages aren’t received well. Buyers research first before making a decision and they’re less likely to believe a sales message or want to interact with a salesperson. Consumer behavior has changed and marketers are making a shift to inbound marketing techniques that provide potential customers with objective information and seek to build relationships and trust.  Recruiters and HR professionals are seeing a similar shift in attitude, especially with the Millennial generation. Millennials seek to be engaged. They want to understand the story and be part of a cause.

Back to Smart Cars and pigeons. What did Smart USA accomplish with their repartee?

  1. They showed that they were listening – even to their detractors.
  2. They responded in a very intelligent way, making a great point about their product without disrespect to anyone.
  3. They showed a lot of organizational character – specifically, intelligence and a sense of humor.
  4. They hit the ball out of the park in terms of brand awareness – 22 million impressions and a 333% spike in searches for information about their automotive frame.

Most importantly, they made some friends. Clayton Hove, the originator of the sarcastic jab, called Smart’s answer, “the best social media response ever.” Many others saw the interchange, laughed, then learned more about Smart’s little vehicles. Their attitudes shifted positively towards the company. Relationships and trust were built.

smartcar

Lessons?

So here’s the obvious question: How do you apply the story to the Human Resource department in a typical U.S. company? It only takes a little bit of imagination to translate the audience from consumers to employees or potential employees. There are certainly detractors within the ranks and maybe potential candidates who aren’t favorably disposed towards the company. What behaviors are suggested by Smart USA’s example? Are you listening? How will you respond?

is owner of DP Marketing Services and works with Georgia Employers’ Association on a range of projects. He writes regularly on marketing topics and will be posting occasionally on the GEA blog.