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Salary Exempt to Salary Non-Exempt California

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  • Salary Exempt to Salary Non-Exempt California

    So my company is reclassifying it's supervisors to comply with the new FLSA rules. Currently I make $41,600 a year, which is equivalent to $20 per hour based on a 40 hour work week. This is the minimum salary an exempt employee can receive under California law. They want to reclassify me as salary non-exempt, but say that my job should take 45 hours to complete on average. Which means they want to make my new salary ~$35032, and then ~$6,568 will come from the 5 hours of overtime every week to make a total of $41,600 per year. This new salary is equivalent to ~$16.81 per hour. I understand that they are doing this for a cost-neutral solution to this new law, but this just doesn't feel right to me. My original salary was based on a 40 hour week in the calculations of California's minimum salary, and my pay stub even says "Salary 40 hours." They say that the job never was intended to be labeled by any amount of hours worked and that I was just being paid to do the job, and that this new law has made them put this 45 hour label on the position. It feels like a pay cut, but they're argument is I always have to work 45+ hours a week so I'll be making more than usual anyways. My argument is that my current salary is based on calculations that involve a 40 hour work week, and that my salary should remain the same and any overtime worked past 40 should be placed on top of that salary. From what I've read, what they plan to do seems completely legal under federal law, but I haven't been able to find anything related to this under California's rules. Is my argument valid or am I just whining at this point?

  • #2
    They have a valid argument and it is completely legal to change your compensation plan going forward and honestly its the federal government that has forced this on you -- not your employer. Why should your employer have to give you such a large pay increase (OT for 5 hours per week would be an extra $150 a week or $7800 a year) based on something the government decided to change? For that, they could just raise you to the minimum exempt weekly rate and pay you less than that $7800 anyway. Is your job today truly worth more to the employer than it was prior to this gov't mandate?

    While a lot of people think that the exempt salary is only meant to encompass 40 hours a week, it was truly meant to encompass all the time that it took to get your job done. If you worked 38 hours in a week, they didn't dock your pay, right? So if you want to make the 40 hour argument, I suspect you would owe them some hours for NOT really always working 40 hours per week.

    What we have done is asked those moving to clock their hours since June and have taken an average to see what they normally worked for that exempt salary. And we have found what your employer did...that exempts are working/clocking about 45 hours per week. In the end if you keep working what you are right now, you will make the same amount of money that you currently are. If you work more, you will make more (assuming your employer allows more overtime).

    I do understand it stinks.... Many employers disagree with the fact that the jump in weekly minimum pay was so high, but realize we had NO say in the matter.

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