Page 1 of 2 1 2 LastLast
Results 1 to 10 of 19
  1. #1
    Join Date
    Oct 2019
    Posts
    9

    Default Changing Employee Classification

    My question involves labor and employment law for the state of: Georgia

    I have a second question involving a subordinate of mine. It boils down to: are you allowed to change an employee's classification back and forth between exempt and non-exempt? The industry standard for the position is exempt, if that makes a difference.

    I am the direct manager of "Jane". Jane was hired as a salaried, exempt employee at $60,000/year. Two weeks ago, she was low on work and sent out an email asking if anybody needed help with anything. Word of this got back to the owner and he decided that she would no longer be a salaried, exempt employee but instead an hourly, non-exempt employee. He wants to send her home without pay if she's low on work again but will pay overtime if she ends up over 40 hours. We are fully expecting for her to be changed back to salaried once busy season hits and we're all working 50-60 hour work weeks.

    Following this, the owner has also decided that if I want to train and develop her skills, that he will not pay her the full hourly rate, but a rate of only $15/hour for any time that is not spent as directly billable to a client. I have a feeling I already know the answer, but can someone confirm the legality of this as well?

  2. #2
    Join Date
    Dec 2009
    Location
    Lake Chapala
    Posts
    2,950

    Default Re: Changing Employee Classification

    Exempt/non-exempt status is not determined by industry standards, nor is it determined by what company owners want to do at any given moment. Exempt/non-exempt status is determined solely by the federal Fair Labor Standards Act (FLSA). This determination is based on what employees do at their jobs.

    What does Jane do?

  3. #3
    Join Date
    Oct 2019
    Posts
    9

    Default Re: Changing Employee Classification

    She's an accountant.

  4. #4
    Join Date
    Dec 2009
    Location
    Lake Chapala
    Posts
    2,950

    Default Re: Changing Employee Classification

    An accountant at $60K per year sounds pretty exempt to me!

    The FLSA understands that many exempt positions contain non-exempt components, including being trained on things now and then. (Have you ever filed a document while working at your current presumably-exempt job? And did IT train you in starting up your work computer when you began your exempt job? Probably "yes" to both - but that doesn't mean your status changed to non-exempt during the few moments you filed that document/learned how to turn on the computer.)

    Tell the owner that because the bulk of Jane's job is being an accountant at $60K per year, her status can't legally be changed back and forth just because she's occasionally doing a little non-exempt work or being shown how to do stuff now and then. If Jane runs out of work, you can (while maintaining her exempt status and rate of pay):

    1. give her some other stuff to do;
    2. show her how to do some things;
    3. send her home and pay her while she's off;
    4. put her on PTO and then send her home and pay her while she's off; or
    5. let her stay at work and twiddle her thumbs (on full pay!) until some work appears.

    The upside (for the company) to all of these choices is that Jane won't be entitled to OT pay if she ever has to work late.

    Note: I've had 30+ years' experience telling company owners and senior management what they're supposed to do if they want to comply with employment law. If what I tell them is not what they want to hear (and it usually isn't - 'cause compliance often costs more, in the short run anyway), they respond with "oh well you're not a lawyer, what do you know" or similar. To which I reply (sweetly) "Oh OK, I can arrange for you to meet with our company lawyer to discuss this subject...when would you be available for such a meeting?"

  5. #5
    Join Date
    Oct 2019
    Posts
    9

    Default Re: Changing Employee Classification

    Awesome! Thank you.
    I feel kind of bad because I'm the one that put Jane in this predicament. I had the gall to say that we don't have sufficient work procedures in place and that anytime that I felt Jane should not be billing the client for as we're creating and implementing those procedures would be recorded as some type of office/admin/training time. And that the time I spent her teaching her how to be more efficient in her job would be the same.

    The response was fine but we won't pay her her normal rate for it. Which lead me to look up my non-compete agreement and update my resume.

  6. #6
    Join Date
    Nov 2013
    Posts
    6,460

    Default Re: Changing Employee Classification

    I agree with eerelations. An account making over $23,600 per year are exempt employees for both the salary based and duties based tests of the FLSA.

    You can read a summery of the tests here.

    What is important about your situation with respect to the salary based test is this:

    With some exceptions, the base pay of a salary basis employee may not be reduced based on the "quality or quantity" of work performed (provided that the employee does "some" work in the work period). This usually means that the base pay of a salary basis employee may not be reduced if s/he performs less work than normal, if the reason for that is determined by the employer. For example, a salary basis pay employee's base pay may not be reduced if there is "no work" to be performed (such as for a plant closing or slow period), and a salary basis employee's base pay may not be reduced for partial day absences. However, employers may "dock" the base pay of salary basis employees in full day increments, for disciplinary suspensions, or for personal leave, or for sickness under a bona fide sick leave plan (as for example if the employee has run out of accrued sick leave).

    Thus, there can be "permissible" and "impermissible" reductions in salary basis pay. Permissible reductions have no effect on the employee's exempt status. Impermissible reductions may, in that the general rule is that an employee who is subjected to impermissible reductions in salary is no longer paid on a salary basis, and is therefore nonexempt. However, employers have several avenues by which they can "cure" impermissible reductions in salary basis pay, and as a practical matter these make it unlikely that an otherwise exempt employee would become nonexempt because of salary basis pay problems.The salary basis pay requirement for exempt status does not
    apply to some jobs (for example, doctors, lawyers and schoolteachers are exempt even if the employees are paid hourly).
    The duties test:

    The job duties of the traditional "learned professions" are exempt. These include lawyers, doctors, dentists, teachers, architects, clergy. Also included are registered nurses (but not LPNs), accountants (but not bookkeepers), engineers (who have engineering degrees or the equivalent and perform work of the sort usually performed by licensed professional engineers), actuaries, scientists (but not technicians), pharmacists, and other employees who perform work requiring "advanced knowledge" similar to that historically associated with the traditional learned professions.

  7. #7
    Join Date
    Sep 2010
    Posts
    19,246

    Default Re: Changing Employee Classification

    Note, that if the employee is properly able to be considered exempt, they're outside the FSLA (and most state law) with regard to pay and overtime. The employer is free to pay them as if they weren't exempt if they like and to change that status back and forth, (typically) as long as the employee knows before he works the hours how he's going to be paid.

  8. #8
    Join Date
    Oct 2016
    Posts
    3,297

    Default Re: Changing Employee Classification

    Quote Quoting flyingron
    View Post
    Note, that if the employee is properly able to be considered exempt, they're outside the FSLA (and most state law) with regard to pay and overtime. The employer is free to pay them as if they weren't exempt if they like and to change that status back and forth, (typically) as long as the employee knows before he works the hours how he's going to be paid.

    I may be misreading what you have written but an employer can't switch back and forth as in, EE is only going to have 20 hour worth of work this week so let's pay her as non-exempt this week but she will have 60 next week so we will pay her as exempt then.

  9. #9
    Join Date
    Oct 2006
    Posts
    15,664

    Default Re: Changing Employee Classification

    Quote Quoting PayrolGuy
    View Post
    I may be misreading what you have written but an employer can't switch back and forth as in, EE is only going to have 20 hour worth of work this week so let's pay her as non-exempt this week but she will have 60 next week so we will pay her as exempt then.
    I am paid in an odd manner. I have a relatively low hourly rate and am paid a bonus that I spread out over the year to make my income a little more consistent across the year. However, I get overtime during the tax season (because I won't work 60 hours a week unless I get overtime lol) and I am paid a flat salary during the off season no matter how many hours I work.

  10. #10
    Join Date
    Oct 2016
    Posts
    3,297

    Default Re: Changing Employee Classification

    Quote Quoting llworking
    View Post
    I am paid in an odd manner. I have a relatively low hourly rate and am paid a bonus that I spread out over the year to make my income a little more consistent across the year. However, I get overtime during the tax season (because I won't work 60 hours a week unless I get overtime lol) and I am paid a flat salary during the off season no matter how many hours I work.

    And that is perfectly legal. What your employer couldn't do is pay you hourly during the offseason and then as salary exempt during tax time.

    As a general test, if it is in the employee's favor it is OK.

    1. Sponsored Links
       

Page 1 of 2 1 2 LastLast

Similar Threads

  1. Compensation and Overtime: Changing of Employee Job Duties
    By suzweb in forum Employment and Labor
    Replies: 1
    Last Post: 02-28-2015, 11:07 AM
  2. Classification of Workers: Do U.S. Employee Classification Laws Apply to Overseas Operations
    By tanked in forum Independent Contractors
    Replies: 3
    Last Post: 09-19-2014, 09:04 PM
  3. Compensation and Overtime: Changing an Employee from a Salary to Hourly in Texas
    By pattimck in forum Employment and Labor
    Replies: 5
    Last Post: 03-13-2014, 07:28 AM
  4. Classification of Workers: Classification of Employee Laid Off and Rehired As Independent Contractor
    By Pisces 1974 in forum Independent Contractors
    Replies: 1
    Last Post: 03-23-2013, 11:28 AM
  5. Classification As An Employee Or Independent Contractor
    By hmbailey in forum Independent Contractors
    Replies: 3
    Last Post: 02-03-2008, 02:35 PM
 
 
Sponsored Links

Legal Help, Information and Resources