The U.S. Department of Labor passed legislation regarding the FLSA Overtime Rule in 2016. This new ruling, which established a new salary threshold, effective December 1, 2016, prompts many organizations to reevaluate and update their policies and procedures in relation to employees who are currently classified as exempt.
Implementing these changes means some potentially challenging conversations with employees. It is possible that an employee who has flexibility and never had to log time will now be required to keep track of their time and follow a more rigid schedule.
In order to properly communicate the effects of the FLSA ruling with employees, it is important for organizations to prepare and develop a communication plan.
Before implementing any type of communication plan, do the research. Become familiar with the new FLSA ruling, what it means, and have an idea of the potential effects. Execute an audit of staff hours and payroll. Performing an analysis prior to addressing staff will enable a more open and honest conversation with employees.
Let employees know early on that the organization is working on developing a plan. It is okay to let employees know that the official answers and impacts are still pending.
Be sure to consider any prior analysis when deciding when to let employees know, who is going to tell them, and what the message is going to be.
Prepare for negative feedback from employees before, during, and after the announcement is made.
Alice Kilborn, SHRM-CP, a workplace litigation consultant, noted in an interview with SHRM that “employers can expect many employees to feel hurt and under-appreciated, many workers place a premium on the prestige of being considered an exempt or salaried employee—no matter how much we emphasize that it’s just a categorization of pay and not a reflection of importance or level of contribution.”
Keep in mind that even though it is not a reflection of important or level of contribution, a classification change to an employee from exempt to nonexempt may be viewed as a step back in that employee’s professional growth.
Potential Policy Changes
Another concept to consider during the communication planning process is benefits. If an organization has different tiers of benefit packages related to exempt/nonexempt classifications, be sure to communicate that as well.
“Typically we see this in [paid time off] or vacation accrual, and possibly long-term disability or life insurance. Sometimes this change will be to the detriment of the employee; in other instances, the PTO or vacation accrual may increase by going to a nonexempt position, or rules concerning year-end cash-outs may be more favorable to an hourly employee,” Marie LaMarche, SHRM-SCP, labor relations division director for CHI Franciscan Health told SHRM.
Flexible hours, telecommuting, bring-your-own-device, time-off, and other workplace policies will likely need to be reevaluated and redesigned.
For example, if a currently exempt employee often answers emails in the evening after work is now classified as nonexempt, the time spent checking and answering emails may now qualify that worker for earned overtime.
This is a situation for which a policy needs to be defined or redefined. If an organization wants that employee to continue to check and answer emails after work, a time-tracking policy is needed. If an organization wants that employee to cease all after-hours work, a strict and enforceable policy is recommended.
Implementing a discipline policy may help reduce any rule violations regarding unapproved overtime by nonexempt employees.
What if an organization has a widespread flexible environment and now half of the staff is eligible for overtime? This triggers not only a policy change but a cultural change as well.
It is beneficial for organizations to maintain a healthy morale among staff while minimizing any potential effects on productivity and engagement.
Reclassified employees may now also worry about getting their work done in a 40-hour workweek. Communicating when these reclassified employees should and should not work needs to be clarified throughout the organization. All managers need to relay how work should be managed and prioritized.
Another aspect of overtime wages that will be greatly affected is travel. Nonexempt employees travel time compensation will have to be tracked and monitored.
Developing a non-exempt travel policy should also be considered.
Developing a Communication Plan
Communicating these changes in an informative, open way helps set a positive tone for an easier transition
Christine V. Walters, SHRM-SCP, points out in a SHRM article that communicating well before the compliance deadline reduces the element of surprise. She states to “share with them not just what may happen but why it’s happening [so] they understand it’s no reflection of their performance.”
Ensuring it’s not a performance reflection is a key component in communicating the updated policy.
It’s very likely an organization does not have an implementation plan set in place yet but it’s never too early to begin communicating with employees about the potential changes.
Explain to employees that this new rule may affect them, how it could potentially affect them, and address what the new law means.
Here are a few things to think about when crafting an FLSA Overtime Rule communication plan:
- Be Open: Don’t hide things from employees. Chatter around the office about the new rule is happening and it’s best to confront and acknowledge the elephant in the room.
- Be Clear: Don’t mislead staff. If the organization is unsure how to handle the new rule or policy implementation, let employees know that. If the organization knows how to handle the new rule and exemptions, let employees know that.
- Be Concise: Complicated changes are going to take place which means complicated questions are going to be asked. Don’t overlap or overload employees with unnecessary information that could confuse them.
- Be Consistent: Don’t flip-flop between answers throughout the discovery and implementation processes. Make sure that the entire organization is on the same page about the impact and how new policies will be applied.