By: Katherine Muniz Jul 05, 2016

Changing Employees from Salaried to Hourly

Due to the updated overtime law, salaried workers earning under $47,476 will be entitled to overtime come December 1st.

By definition, salaried workers are salaried because they perform certain job duties, typically managerial, and are compensated solely based on the job they perform, not the hours they work. Depending on the demands of their workload however, many salaried workers do perform well over 40 hours per week during busy time or peak seasons throughout the year.

Now that the overtime pay threshold has been updated from $23,360 to $47,476, 4.2 million additional salaried workers will now receive overtime pay for all hours worked over 40 in a week.  So does this mean that affected employers will be forced to increase their payroll costs? Not necessarily. There are multiple ways employers can keep costs relatively the same:

  • By instructing salaried workers not to work more than 40 hours a week, salaried employees virtually retain the same pay and overtime can be avoided. If added support is needed to keep operations intact, a few part-time workers can be brought on to help out.  
  • Salaried employees earning close to $47,476 could reasonably be given a raise in order to raise their salary above the overtime threshold, making them ineligible to earn overtime. 
  • Since salaried workers will now be entitled to overtime after working above 40 hours per week, feasibly an employer could switch newly eligible salaried workers to become non-exempt hourly employees, and assign them an hourly rate. 

Should you pursue a course of action that requires transitioning salaried workers to become hourly workers, it’s important to know that your employees may not respond positively to the status change, and may also realize that they have been given a pay cut, so to speak. However, all hourly employees must comply with hour and wage laws that now affect them. Here are the time tracking must’s for hourly employees: 

  • Must clock in and out of work. Time tracking is required for hourly employees.  
  • Must be on the clock at all times while working, even while working at home and at night.
  • Must be paid for travel time, waiting time, and on-call time.

All things considered, even if your salaried employees aren’t technically hourly now, because of the new rules you will be required to keep track of their hours. How else will you know when they are entitled to overtime? You can assign your employees to record their own start and stop times, appoint one employee as the company-wide timekeeper, or use an online time clock software like FingerCheck. With FingerCheck, employees can easily clock in and out via their smartphone, laptop, or in-office time clock. You can check their hours from any location that has internet.

You can assign your employees to record their own start and stop times, appoint one employee as the company-wide timekeeper, or use an online time clock software like FingerCheck. With FingerCheck, employees can easily clock in and out via their smartphone, laptop, or in-office time clock. You can check their hours from any location that has internet. In lieu of the new overtime laws, accurate time tracking is the key to compliance.

Newly transitioned employees must be particularly vigilant about recording their hours – if you aren’t able to ensure you have provided, in some way, accurate time and attendance records, your company could be vulnerable to overtime lawsuits in the future.  

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Category: HR | Leadership | Payroll

Katherine is a New York-based digital writer who joined Fingercheck in 2015. She promotes Fingercheck through the power of the written word. She graduated from Fordham University with a B.A. in Communications and Media Studies with a focus on Journalism. Connect with her on LinkedIn

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