Here’s my common sense response to the FLSA proposed rule. Pay your people for the work they are doing. Seriously, that’s all. Ideally, pay them what they are worth. If you don’t think they are worth what you’re paying them, it might be time to part ways.
Let’s look at this together. You’re paying people $455 a week and you’re lobbying that they wont want to be hourly because being classified as “exempt” is an honor to them? Do you realize that $455 a week is $11.38/hr? That’s all! $11.38 an hour. If you are still paying people who qualify for exempt status $11.38 an hour, now is a great time to reevaluate your business plan. Can we be honest here? Are you paying them $455 a week because it’s cheap labor? I realize that not every business has money coming out of their ears or can pay beaucoup bucks for folks, but for exempt level duties can we all agree that $11.38 is not a lot of money?
Let me try to sound less harsh. I really considered making this one a video blog so that my tone would come across correctly, but decided against it. I want to challenge you to not take the stance that your employee is going to be upset if they go from exempt to non-exempt because of a “status in the workplace.” Talk to your employees, find out what they are going to be upset about it and start building a strategy that works best for you and your employees. I want to challenge you to evaluate your salaries and see how many people you will actually have to “double” their salary to get them to the right amount to meet the salary test for exemption. Hopefully you’re exempt level employees aren’t that far from the suggested salary now. I know, this sounds ludicrous! You can’t possibly conduct good business through effective communication, can you? Give it a shot!
I know there are many more complicated layers to this and it will vary from employer to employer, but dial down the drama and let’s do what we do best-solve some business problems! Saying “no more overtime” isn’t the answer either. Quite frankly, there will be times that your formerly exempt employees are going to have to work an hour or two of overtime. It’s not going to break the bank and if you aren’t overworking them and you’re truly managing their performance, you’re both going to be fine.
Let me leave you with this. There are some organizations out there that are taking advantage of some 19-year-old employee who is working her ass off, lining their pockets with money, and working for pennies all because someone sold a “status of exemption” to her as being a good thing. That 19-year-old employee working her ass off needs someone to have her back because she doesn’t know a lick about the FLSA, DOL, exempt, non-exempt, duties test, etc., she just thinks she’s being a hard worker and doing what’s right.
I’ve been away from the blog so long that my own page didn’t even recognize me. It’s been a while, eh? I’ve been staying on top of homework and work and all my NASHRM/ALSHRM activities and leaving little time for the bloggymcblogblog here, however it is time for a legislative update for the world of HR. To be 100% clear, this post is not a direct reflection of SHRMs stance on any legislation. This is a summary of a trip that I was recently a part of and it is peppered with sarcasm and opinions from the group I was with.
On September 11th, 2014 ALSHRM Legislative Directors assembled to storm the Hill on topics that SHRM has highlighted as relevant to our profession. I’ve told y’all before this trip is awesome. Seeing your Representatives in DC is vastly different from seeing them in your hometown turf. DC just feels powerful, ya know? It is also a lot of fun for a misplaced city girl such as myself, but I digress. So what did SHRM deem important for this trip? Hang on to your seats folks, because for the first time in about five or six trips it was NOT E-Verify! Color this girl happy, because if I had to argue some ridiculous points about I-9 vs. E-Verify, etc. one more time my eyes were going to pop out of my head and roll across Capitol Hill. Okay, I’ve drawn this out long enough, we mostly chatted with our Congressmen/women and Senators about FLSA.
1st point: Obama’s EO for Federal Contractors with labor violations. This sounds like a silly topic because the EO has already been signed, but the actual regulations and guidance have not yet been finalized. This is a perfect example of why we, ALSHRM, take our Legislative Directors from local chapters across the state to meet with our Representatives on the Hill-to take an opportunity and voice our concerns of the impact of potential decisions. How can they (our Representatives) possibly know what will and will not have a positive impact on our organizations if we do not take the time to tell them? (Kind of, sort of something like you cannot always know what your employees want in your organization if they don’t tell you?) The most valuable time we (HR) have is between now and when they finalize regulations and guidance for this EO (so speak up if you haven’t already). The other end of this same issue is Rep. Keith Ellison (D-MN) has offered an amendment to multiple House Appropriations bills that would debar federal contractors for one FLSA violation in the past five years. One violation? No contract for five years. Here in Huntsville, AL we happen to have a LOT of contractors, that only do contract work. It could drastically change our local economy and our global presence. Not to mention the fact that the last time I looked at the FLSA my eyes went sideways and I started foaming at the mouth. That was a terrible exaggeration, but I’m just trying to get your attention. Oh and remember it was created in 1938? Yes, it’s been amended, but it’s a mostly dated document that reads in such a manner that even the DOL has had a FLSA violation (or so I hear). Back to Ellison, the funny thing about his tactics is that our group discovered he had snuck some of these appropriations in on voice votes when basically no one was around to object (the one I can remember is the energy bill it was successfully attached to). This is the kind of shady business that should not be going on, but it happens. Where is their HR department? just kidding…
Point 2: We took the time to voice concerns about the impact of raising the pay for exempt employees. Not in the manner of the number should not be raised, but what it could look like for organizations and employees if it were raised too high. One can suspect that there is an effort of wage inflation behind this task order, but only time will tell. As an HR person I think we should pay our people fairly, even our HR people, but I think that lawmakers are overlooking an important piece to this puzzle: bottom-line. Companies will not automatically increase exempt level employees pay scale so that they can stay classified as an exempt employee. Especially if they do not have the money to do so. Some companies will have to take exempt level employees and re-classify them as non-exempt. This step will, in most cases, take away that employees flexibility. We will simply be paying employees for hours worked and not necessarily the work they do. So if I go in to work around 1pm today because it is my daughter’s birthday and I wanted to have lunch at school with her, but I’m now non-exempt instead of exempt, I may not have the opportunity to make up the hours I missed before the end of the pay period. This is a sticky situation because it depends on your industry and how you treat your employees and all kinds of other factors. I think, at the risk of sounding overly conservative, the free market kind of works, right? Companies that take care of their employees (pay them well, good benefits, non-hostile work environment, etc.) attract a lot of candidates while companies who do not offer such luxuries do not attract as many candidates.
All of this to say, no matter what your opinion is if you do not speak up, no one will know. The wonderful thing about us going as a group representing each district from the state is the power in numbers. We do not represent one organizations interest, we represent the integrity of the Human Resources profession collectively and come from a variety of businesses. I also want to remind you that it is important to meet with your Representatives in your home district, but meeting with them in DC is well worth it too. You can keep up with all of this information yourself if you’d like (I strongly encourage you do so): http://thomas.loc.gov/home/thomas.php
Questions? Negative opinions? I’d be happy to entertain them, hit me in the comments below!