Forums
"downgrading" an exempt employee to hourly
Legal Forum
"downgrading" an exempt employee to hourly
Discuss employment-law issues such as family leave, overtime, disabilities law, harassment, immigration and termination.
Our organization is laying off staff (from a staff of 6 to 2). However, they have offered one full-time, exempt, salaried staffer the option to remain on staff, but they have to work less than 20 hour
0
Cat:Topic ForumsForum:ForumId54
Cat:Topic ForumsForum:ForumId54Discussion:DiscussionId37109
Forums » Topic Forums » Legal Forum » "downgrading" an exempt employee to hourly
|
"downgrading" an exempt employee to hourly
posted at 8/18/2011 12:21 PM EDT
|
Posts: 7
First: 2/16/2007 Last: 8/19/2011 |
Our organization is laying off staff (from a staff of 6 to 2). However, they have offered one full-time, exempt, salaried staffer the option to remain on staff, but they have to work less than 20 hours/week because they cannot afford to pay any more than that. Can they simply turn the position into an hourly through an agreement, or should they re-classify the position and then convert it back to a salaried position if they start bringing more money in? |
|
|
"downgrading" an exempt employee to hourly
posted at 8/19/2011 6:16 AM EDT
|
|
Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
I believe you will be on shaky ground if you convert to hourly and then back to salaried.
If the person is only going to work for 20 hours a week (on average) then continue to make them an exempt employee but just offer them half the salary they are currently earning. So if the exempt employee was earning $50,000 per year (paid weekly, semi monthly etc), provide a new salary that is the annual equivalent of $25,000 per year and you are finished. Remember to check that all your benefit plans will allow this person to continue to participate while only working 20 hours per week. Many plans will not permit this......... |
|
|
"downgrading" an exempt employee to hourly
posted at 8/19/2011 7:15 AM EDT
|
|
Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
Agreed. Converting to non-exempt would certainly give the employee ammunition in any wage and hour dispute over pay for overtime hours she/he might've worked as an exempt employee.
|
|
|
"downgrading" an exempt employee to hourly
posted at 8/19/2011 7:35 AM EDT
|
|
Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Just remember that you still have to meet the minimum weekly salary -- Is it still $455? Granted hopefully you will with no issues. But that minimum amount can NOT be prorated at all.
Also don't forget that in most states a pay/hours decrease of more than 20% can allow the employee to receive partial unemployment benefits. So in the end it could end up costing the employer more than just the original 1/2 salary. |
|
|
"downgrading" an exempt employee to hourly
posted at 8/19/2011 8:19 AM EDT
|
|
Posts: 7
First: 2/16/2007 Last: 8/19/2011 |
Howard7, they do not have the money to pay the person's benefits any longer, thus another reason for the reduction in hours. Basically they are telling this person they can work no more than 19 hrs/week, but there will not necessarily be enough work to put in that many hours per week. Should the person be reclassified to an hourly classification? |
|
|
"downgrading" an exempt employee to hourly
posted at 8/19/2011 9:21 AM EDT
|
|
Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
""Should the person be reclassified to an hourly classification?""
Not required. If they are doing exempt duties AND you pay the exempt pay minimum to pass that test you should be ok. You should check on the reduction in hours triggering other issues as noted above. Also make sure that he/she and all dependents receive all the necessary COBRA notices as they have the right to continue coverage if they pay the 102% of the premium. |
|
|
"downgrading" an exempt employee to hourly
posted at 8/19/2011 10:50 AM EDT
|
|
Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
"I have heard of voluntary resignations to avoid layoffs, could a staffer volunteer to reduce their hours to save their job?"
Sure, they don't have to file for unemployment, I was just warning you that they might do so. Heck, they can reduce their pay and not reduce their hours if they were so inclined. But again, you still have to make sure if they are exempt that they are making the minimum exempt weekly salary. And yes, you will have benefits issues like COBRA if they become non-eligible as employees. Have they been told how expensive COBRA usually is? I know many times there is a large sticker shock to employees who lose coverage! However, should your employer be inclined and should your insurance carrier allow it, the plan could be changed to still cover those working less than 20 hours per week. But I suspect your employer is looking at the benefits cost as being something they could save too along with the payroll cost. You might be able to make a class of exempt employees that are eligible for insurance regardless of how many hours they work -- again, you should check with your broker and carrier to see if it is available under your policy or with a change to your policy. I suspect if you cut their pay and hours, once they realize they have to pay COBRA that you will lose a large portion of this group. Just my opinion. Because I suspect COBRA premiums (if for a family) will eat us most that minimum salary. |
Forums » Topic Forums » Legal Forum » "downgrading" an exempt employee to hourly
