Some of your salaried employees are about to become hourly employees, and there's nothing you can do to stop it. Starting on December 1, 2016, the minimum salary needed to qualify for a salary exemption will jump from $455 a week ($23,660 per year) to $913 per week ($47,476 per year). If you have employees who are currently exempt from overtime who earn less than $47,476 per year, you'll have to change the way they are paid.
How should you tell your employees? Some of them won't take it very well. You should have managers sit down, one on one, to deliver the news. But you'll also want to follow up with written communication. Here is a sample letter to get you started. You will need to modify it for your specific situation. Please pay attention to local laws as well.
As you may have heard, the Federal Department of Labor has made some changes that will affect you. Starting on December 1, 2016, you will become eligible for overtime pay. This means that you will no longer be paid a straight salary, but will be paid by the hour.
Your new pay rate:
Hourly rate: $20.00 per hour.
Overtime rate: $30.00 per hour. You will receive this rate of pay for any hours over 40 that you work in a single week.
Frequently asked questions.
What will my new pay look like?
Your pay will now be dependent on how many hours you work each week. If you work a regular 40 hours a week, your paycheck will look almost exactly like your current paycheck. If you work more than 40 hours a week, you'll receive overtime pay. If you work less than 40 hours in a week, you'll have the option of receiving pay for only the hours you worked or using some of your PTO in order to make up the full 40 hours. If you have no PTO available, you'll receive a smaller paycheck.
Will I have to punch a time clock?
Yes, under the new regulations, all time has to be recorded. We will train you on how to record your time in meetings scheduled over the next few weeks. Whether you work in the office, or at a client's location, or at home, all time must be recorded accurately.
Can I work overtime whenever I want?
No. All overtime work must be first approved by your supervisor. Our company goal is to keep overtime at a minimum. If you work overtime without permission, you will be paid for it, but you will also receive a warning. Please ask your supervisor before working more than 40 hours in one week.
What if I want to work more hours? I'm willing to do it without extra pay.
You may not do this. Federal law prohibits you from working unreported hours. All work must be reported on your time card. This includes any work you do at home, including any work-related phone calls. Failure to report your time correctly will result in disciplinary proceedings up to and including termination. We realize that you are used to working until you get the job done, but the law is changing and this is no longer allowed. The company can face steep fines if you work off the clock--even voluntarily.
Is this a demotion?
No. The only reason for the change in your pay calculation is a new rule from the federal government. Your job title, level, and responsibilities remain the same. If you have difficulty completing your tasks during normal working hours, please speak with your supervisor. Your supervisor will be happy to work with you to prioritize your workload so that things can be accomplished in a timely fashion.
Can I still work remotely?
Yes. If your boss currently allows you to work from home, you may continue to do so. You will be required to track your hours, just as you would if you were in the office.
How will this affect things like doctor's appointments?
As an hourly paid employee, you will have to either make up the time you are away from your desk or use your PTO to cover things like doctor's appointments, school meetings, or a long lunch.
Can I take comp time instead of overtime?
If you work 50 hours one week, you cannot just work 30 hours the next week and receive a paycheck for a normal 80-hour pay period. Federal law requires that you receive overtime pay for the 50-hour week, even if you work fewer hours the next week. Comp time is not allowed for non-exempt employees.
Please let us know if you have any further questions. We are happy to help you through this transition.
The HR Department.
Hopefully, this letter gives you a bit of a start on writing your own. You will have to make adjustments for your company.