Companies are starting to implement changes in anticipation of the FLSA changes happening on December 1st. While there are still some efforts to delay under way, it’s unlikely that the changes will be prevented from happening. The more uncertain thing is whether the Trump administration is likely to keep, or work to reverse, the changes. In the meantime, time marches on for American businesses. I’ve been gathering stories from friends and colleagues about how various companies are rolling out their changes. For some, it’s great news, for others there are great lessons. What are employees hearing about FLSA and what can we learn from it?
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In this company, they pulled impacted employees into a meeting, shared information about the changes, and let people know the impact to them. As we know, the messages we intend don’t always land as expected. In this case, the employee heard that because of a new federal act, she would have to make a certain amount of money in order to be salaried. She doesn’t, so therefore will be paid on an hourly basis.
There are a few things to learn from this example:
- Share information about the changes as simply as possible. You may have tracked the FLSA dialogue for the past year, but for many American workers, the first they heard of it was during the election. For big announcement meetings, less is more.
- This organization focused on the shift from salary to hourly. While that is true for the employee, the impact isn’t just in the manner of payment and time tracking. There was a missed opportunity to convey the benefits of earning overtime.
- The way the employee heard the message implied they weren’t good enough to keep their status as a salaried employee. You have to make x, you don’t. Talk about adding insult to injury, I’m sure the employee would love to make the minimum threshold!
An employee has been asked to work additional hours during the weekend and on major holidays in addition to the 40+ hours she already works. She approached HR about this because her boss has made it a requirement rather than a request and actually threatened her job for it. HR let her know that even after December 1, she would still be classified as an exempt employee and not be able to receive any overtime pay. She is well under the $47k line for her annual salary. The employee is currently job hunting, and is considering filing a claim if she doesn’t get a job before D-day.
Some things to learn from this example:
- Know the laws. If you’re not consulting legal resources or information, your employees may be. The DOL makes it very easy to file a claim, which is good to know, and it just takes one unhappy employee to cause problems for you.
- Pay attention to how your managers enforce compliance regulations.
- Be plugged in to how your employees feel. Unhappy employees are much less likely to take one for the team.
In this organization, an employee earns around $35k/year and was on salary, because of the FLSA changes he’s being changed to hourly and is required to submit a time card for the first time in this role. He was informed via an email from HR, effective the pay period of November 25th. The employee had questions ranging from what he needs to do with their timecard to whether or not he could petition to remain exempt. The email was fairly cut and dry and didn’t invite dialogue, so he started reaching out for information from friends. The new rules don’t work in his favor, so he was looking for ways to remain exempt.
Here too we have things to learn:
- Even if you think the communication is straightforward, invite questions. Provide ample opportunity for your employees to seek more information from you, or they will seek it elsewhere.
- Anticipate how your employees are likely to respond to the news. The organization in this example is in an area that strongly supports employee rights, so rather than feeling like the changing overtime rules provide more protection, it feels more like they tie the employee’s hands.
- Consider sharing more about the intention of the changes if you have employees who may not react positively.
This organization anticipated the upcoming FLSA changes and used the opportunity to do a full audit of all jobs and job descriptions with an attorney. They had a clear communication plan where, after identifying what changes would happen, HR trained managers on the implications. Then HR and managers sat down together with impacted employees. The hiccup in this organization came when meetings were delayed without informing payroll, so some employees were informed of the changes when payroll asked for their timesheets. As salaried employees moving to hourly time reporting, they had not used time cards and so faced a jarring introduction to the changes.
Further, there was a lack of clarity in the organization about how much they wanted to follow the letter versus the spirit of the law, so there were inconsistent messages being delivered by HR, managers, and payroll. Payroll was put into the role of enforcer.
What can we learn?
- Things happen; work is the priority. Expect that something will come up. The best laid plans are still just that, plans. Have a contingency plan for when the original one doesn’t happen as intended.
- Decide early how risk averse your organization is. If you’re highly risk averse, you’re more likely to follow the letter of the law. If you’re more risk tolerant, you’re more likely to follow the spirit of the law. Come to agreement about the organization’s intentions and be consistent.
This organization was probably the model organization. I include it mainly to demonstrate that you can try to do everything right and still not make everyone happy. The employee in this example is a friend of mine, so I have been pumping her for information for months. Her organization evaluated and updated all job descriptions with a lawyer. Then they pulled everyone in the organization into a meeting, explained the high level implications of the FLSA changes. They gave plenty of time to ask questions, and went as far as to tap into the realities of which departmental budgets would capture overtime pay for events.
The all staff meeting was then followed up with one-on-one meetings between managers and employees. Because every single job description was edited in one way or another, every employee met with their manager, not just those being converted to non-exempt. My friend reported back after her meeting that her job was, in fact, being converted to non-exempt with hourly reporting requirements. This employee, my friend who is both well-versed in the FLSA changes and expected to be reclassified, still had disappointment in her voice when she reported back to me that she is being converted to hourly.
As of this writing, nothing has passed to prevent the changes from happening on December 1st. That said, many organizations are going ahead with their changes, focusing their attention on how to make it work for their budget, using their choices to demonstrate their values and commitment to their employees, and communicating effectively.
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