Question: All of our restaurant and kitchen managers are paid a salaried wage (based on experience), and have similar job requirements. With the new overtime regulations (FLSA exemption requirements) headed our way in December, we are going to switch our newer, less experienced (lower paid) managers to hourly management. Can their job descriptions remain the same, just with the hourly vs. salaried title?
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Answer: If the job duties for your restaurant and kitchen managers currently meet the Fair Labor Standards Act (FLSA) exemption requirements, then their job descriptions likely can remain the same even if your newer, less experienced managers are converted to hourly, nonexempt employees.
To be exempt under the Fair Labor Standards Act (FLSA), an employee generally must meet both the job duties’ requirements of one of the exempt classifications and also be paid on a salary basis. As a practical matter, the use of the exempt classification under the FLSA is to some extent the choice of the employer. If an employee’s job duties meet one of the exemptions, but the employer chooses to pay the employee on an hourly basis, then the employee is nonexempt since he is not paid on a salary basis.
In the past, though, it could raise red flags for the Department of Labor (DOL) if an employer had employees with the same job duties classified as both exempt and nonexempt, mainly because the salary level (currently $455 a week, $23,660 a year) was so low that the different payment methods could raise a question as to whether the employees’ job duties really met the exemption requirements. Accordingly, most HR and legal experts would advise employers to classify all employees with the same job duties in the same way, either all exempt or all nonexempt.
However, with the substantial increase to the FLSA salary level for exempt employees that takes place on December 1, 2016, it is likely that many employers will choose not to increase the pay of formerly exempt employees to meet the required $913 per week, $47,476 annual salary, over double the current salary rate. So, if you prefer to convert some of your now-exempt restaurant and kitchen employees to hourly employees and pay them below the $913 per week, $47,476 annual salary threshold, it should be clear that your reason for doing so is because you did not want to increase their salaries to meet the new threshold, not because of any question about whether their job duties meet the FLSA exemptions.
Of course, it always is a good idea to document your rationale as well, just in case there are any questions about the different classifications for employees with similar job duties. And, if you choose to pay the currently exempt employees less than the required exempt salary, then you also will have to treat them as nonexempt employees and keep appropriate time records and pay them overtime.
Because of the complex issues involved with the FLSA and the exemptions, you should consult with an attorney who has an expertise in these issues.
You may want to designate a difference and split the job descriptions. Document what determines who is exempt based on increased experience or responsibility. What would it take for an hourly manager to get promoted to an exempt one. That would take away any gray area.