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Reclassification downward job movement. Alabama

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  • Reclassification downward job movement. Alabama

    In Alabama, can my employer change my non-exempt payroll status to an hourly rate, and reduce my pay by 10% per hr to the same as non-exempt hourly employees? My job responsibilities would remain the same as I have been performing in a salary position.
    Just recently, for the first time I received a letter from HR that I was at the top of my pay band for my position and the company would not be giving any merit or performance raises in the future. On "good faith" they gave me a one time live check of 1% of my base salary. Thank you for any information.

  • #2
    Non-exempt is the default. You are non-exempt until or unless the employer can prove, to the satisfaction of the DOL and the IRS, that you are not.

    Salaried is only a pay method. It confirms no legal status on you in and of itself. Not all exempt employees are salaried; not all salaried employees are exempt.

    The only circumstances in which the law requires that you be given a raise would be if the minimum wage was raised by the appropriate legislative body and your current wage was less than the new minimum. The law never requires merit or performance raises under any circumstances. Prospective wage decreases are legal as long as minimum wage and overtime laws are complied with.

    All of the above applies in all 50 states.
    The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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    • #3
      I completely agree with what CBG says above. They can change your pay as long as they notify you in advance and the new pay system is otherwise lawful (meaning for instance you are still above minimum wage and now that they are paying you hourly, you are getting correct overtime if you work more than 40 hours in a week). The one thing I would add is that when something like this happens, you have to wonder why they did it. One possibility is that you may have been improperly classified as "exempt salaried" previously, in which case they could owe you back wages and possibly penalties (what we call "liquidated damages" in wage law), if you worked overtime in the past. If you are wondering about that, it may be a good idea to do some more research to see if you might have been improperly classified as exempt in the past. Good luck with everything.

      This does not create an attorney client relationship. I am licensed to practice law in California and the District of Columbia only.

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      • #4
        It doesn't sound like the OP was classified as exempt, just paid on a salary basis. That is totally legal. I completely understand changing someone from salary non-exempt to hourly, particularly if the hours are variable at all. As for the 10% reduction, there can be any number of reasons for this including an expectation that you will be "making up" some of that "lost" pay in OT. Taking someone from salaried to hourly does not always mean dividing the weekly salary by 40 and using that rate. There is a lot more that goes into building a compensation plan for someone than that.
        I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.

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        • #5
          I agree, Elle. I believe they were salaried non-exempt & not salaried exempt.
          Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

          Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

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          • #6
            Originally posted by ElleMD View Post
            As for the 10% reduction, there can be any number of reasons for this including an expectation that you will be "making up" some of that "lost" pay in OT. Taking someone from salaried to hourly does not always mean dividing the weekly salary by 40 and using that rate. There is a lot more that goes into building a compensation plan for someone than that.
            Indeed this is true. When IBM turned several thousand software and engineering employees from exempt to non-exempt, there was roughly a 10% cut in their nominal pay (e.g. someone making $2000/week was converted to about $45/hr, instead of $50/hr; which is 2000/40) The explanation was that they had reviewed the time records and had found that the typical exempt person was putting in 45-50 hours/week, and with the new system, they would be making 5-10 hours of overtime, and that in actuality, their take home pay would go UP (2137/wk for 45 hours work). That somewhat sweetened the psychological blow of being converted from perceived "white collar salaried" to "blue collar hourly".

            It also has the useful byproduct of giving you better cost and schedule estimating on future work, because you have a better handle on "actual hours worked", rather than a sort of fuzzy "I don't think we worked too many nights and weekends to get that software build released"
            Last edited by jlca; 05-04-2014, 01:21 PM. Reason: changed rates inexample to be more reasonable..

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