"Well you WERE on salary but not so much anymore."

May 14, 2015 1:24 PM

(Asking for a friend in a similar white-collar cubicle-dwelling software support position in a similar software industry.) My friend is salaried at a large software development company. Been in the industry 20 years, been at his current job about 5 years for a large, US-based, publicly traded software company. He's concerned this is about to be changed.

Like most big companies we've worked for, management reorganizes everyone every nine months or so for various $reasons. He's been in five or six departments, and now is under business unit A.

Some of his work was for business unit B. As the position needs have grown, business unit B decided to hire another pixel pusher to do the same job as my friend.

However, it turns out that the company has decided that anyone working in business unit B should now be an hourly employee and they will hire an hourly employee.

Is it possible for the company to, in a few months, require anyone who does that job for any department switch to being an hourly employee?

The company is based in California, he works for a division in an at-will state, does not have a contract, and is not union (nor is his branch of industry heavily unionized).

posted by tilde to Work & Money (9 answers total)

Best answer: So, yes, they can totally make him hourly if they want. They can cut his pay in half if they want. As long as they don't do anything retroactively (that is, they tell him ahead of time and it only applies to pay for work after they tell him about it), they can (legally) make any changes [i mean, as long as it's above minimum wage and other laws like that] to his salary going forward that they feel like.

However, whether someone is exempt or non-exempt is not really just up to the whim of the company. Those are often correlated with or colloquially used interchangeably with salaried vs. hourly, but they're actually not, and there are rules about it. Here is the FLSA page about it, but there are other resources too.
posted by brainmouse at 1:30 PM on May 14, 2015 [4 favorites]

I worked at a major bank where, post merger, HR evaluated the jobs done at the first bank and at the second bank. At the second bank there were jobs that were listed as hourly which matched up with jobs at the first bank that were listed as salaried. The determination was that all of these jobs at both banks should be hourly, for consistency and, perhaps, to comply with laws and regulations.

Your friend's situation sounds similar. Why would people doing the same things be classified in different ways, HR might say.

It was an interesting situation at the bank. People were getting the same pay basis as hourly employees as they had when they were salaried. In addition, they were going to be paid for overtime. Even so, the people I worked with felt strongly that, as professionals, they should be salaried.
posted by Midnight Skulker at 2:22 PM on May 14, 2015

brainmouse is correct in that they can technically do whatever they want, for whatever reason, as long as there's no contract.

In reality, the answer to this completely depends on how your friend's company is organized, and how much autonomy various departments have, and I don't think anyone here can definitively answer that for you. On the one hand, larger companies tend to coalesce around standards and consistency; on the other hand, software companies often operate in loose ways.
posted by mkultra at 2:35 PM on May 14, 2015

Yeah- they can totally do that. They will have to give him notice, tho. Computer programers and other higher-paid hourly computer jobs are often exempt from overtime, just a heads up. I think the cut off is $27.63 an hour.
posted by Blisterlips at 2:36 PM on May 14, 2015

Something similar happened to me a while back. All employees under a certain grade were reclassified as hourly. I wasn't super happy about it, but when my boss figured out that he'd actually have to pay for overtime instead of tossing me a pity comp day every once in a while I was reclassified quickly.
posted by Oktober at 2:39 PM on May 14, 2015

Best answer: Is it possible for the company to, in a few months, require anyone who does that job for any department switch to being an hourly employee?

Some terminology points, as brainmouse correctly indicated:

• "Hourly": Usually refers to paying someone by the hour at a fixed rate per hour. This is not a legally defined term in the FLSA. This may or may not imply overtime pay (but usually does imply overtime pay), may or may not imply benefits (but usually doesn't imply benefits), may or may not imply any particular authority (but usually doesn't imply authority), etc.
• "Salaried": Usually refers to paying someone a fixed amount for a variable amount of work. This is not a legally defined term in the FLSA. Similarly to hourly, it does not necessarily imply overtime pay (but usually doesn't), benefits (but usually does), or authority (but usually does).
• "FLSA-Exempt": So long as the employee meets certain characteristics (professional role, skilled work, etc, as summarized here or here), the employer is not required to pay an employee overtime. These employees may still be paid overtime, but it is not a requirement for the employer. Many employees are incorrectly characterized as FLSA-exempt. Note that both salaried and hourly employees can be FLSA-exempt. For instance, an hourly employee could be denied overtime pay if the employee is characterized as FLSA-exempt.
• "FLSA-non-exempt": If the employee does not meet the characteristics to be FLSA-exempt, the overtime restrictions of the FLSA apply, and the employer is required to pay for overtime. Note that both salaried and hourly employees can be FLSA-non-exempt (a salaried FLSA-non-exempt employee would typically be paid overtime at their equivalent hourly rate).

So, yes, there is no inherent restriction in switching employees to hourly status. There is no FLSA restriction to this switch (since the FLSA doesn't differentiate between "hourly" and "salaried" for job protection). Further, in switching from FLSA-exempt to FLSA-non-exempt, the employer is providing more rights to the employee, not less, so that'd not be considered a violation of the FLSA.
posted by saeculorum at 2:48 PM on May 14, 2015 [1 favorite]

They can do that. I'm curious, though, why your friend thinks that's a bad deal. I'm hourly-paid, but FLSA-exempt. My overtime rate is capped somewhat less than 1.5x, but slightly more than straight time. I still like being paid for the hours I work, which is more than 40. Also, like Oktober said, the deterrent factor is there; if someone wants me to be around "just in case" or rush a non-urgent job, well ok, but at least they have to decide it's important enough to pay extra for.

The only drawback I can see is if they start cutting your friend's hours to less than 40 per week to save money.
posted by ctmf at 10:56 PM on May 14, 2015 [1 favorite]

Response by poster: I think it's a matter of a shift perception in our respective positions from "professional" to "grunt work". Generally we were "hourly" and filling in time cards for free lance or contract work as opposed to where we are, professionally, now. I know I don't have a contract, I'm a full time employee, I'm pretty sure he doesn't either.

As to whether the companies will start to pay over time for over time work ... I don't know. But if his company is doing it, it probably won't be too long before other tech companies do as well. Our companies haven't switched to salary reductions or required furlough days (fingers crossed) but that doesn't mean it will never happen.

I don't know about the exempt vs non exempt; he didn't bring that up. When I look at my employee info page here it doesn't seem to indicate one way or another right now (new system, no idea how to navigate it).

Thanks, all.
posted by tilde at 7:09 AM on May 15, 2015

For what it's worth, tech companies have notoriously been quite bad about mischaracterizing workers as FLSA-exempt and the federal Department of Labor and various state Department of Labors have started to crack down on this. For instance, five years ago, it started to be quite common to characterize technicians as FLSA-exempt and now it is significantly less common.
posted by saeculorum at 10:07 AM on May 15, 2015