Written by Freya Cooper, FEI Account Manager
A few months ago, a friend who works for a small nonprofit social service agency called to talk about an exciting new law that would give all employees salary increases. I knew immediately she was referencing the U.S Department of Labor and President Obama Administration’s proposal to revise overtime regulations in the Fair Labor Standards Act (FLSA). I made several attempts to calm her and put her excitement into perspective by explaining that it wasn’t law just yet, but my friend was unwilling to hear anything that would negate the salary increase she was looking forward to—a potential increase upwards of $10,000. She was so passionate about this “new law” that I began doubting what I thought I knew: that there was no law, but only a proposal. I immediately called the Department of Labor to confirm that, yes, the new overtime regulations would begin on December 1, 2016.
Some weeks later my friend called to say that during a staff meeting, her organization’s owner discussed the changes employers would be required to make in order to adhere to the new overtime regulations. They talked about maybe not having the budget to survive the changes, about not knowing what to do in response and even mentioned no longer providing free health insurance to all employees. My friend was upset and disappointed. She made comments like “How could they consider no longer providing free health insurance?” “They have the money.” “We deserve the increase!” “Why would they discuss something like this with us?”
While it wasn’t the best idea to tackle these challenges in front of employees, my friend’s perception was that her employer didn’t want to give an increase. My perception, on the other hand, is that a small business was trying to figure out how to survive the required changes. My friend, along with many other employees, may ultimately be disappointed because employers have alternative options available to address the FLSA changes that their workforces may not be aware of. For example, an employer could make status changes, base hourly rates could lower and benefit packages could become less generous.
Employee reaction will be undoubtedly mixed. Not all employees are going to be pleased with the changes their employers make in order to comply with the new overtime regulations, but others will. Some will no longer feel unappreciated in terms of working extra hours they’re not getting paid for; others will regard a mandatory eight hour workday positively because they’ll be happier with the work/life balance. Some managers working 60 to 70 hours a week in the service industry on low salaries will start getting paid for hours worked. There are many possible outcomes.
Employees who perceive the changes negatively will need to be communicated to in a professional way. Paycor offers a really great guide containing tips for communicating with reclassified employees, but managers can always reach out to an FEI account manager for further resources, explanations and guidance.