Changing Employee Back to Hourly

We have an employee that we moved to salary back in April of this year. She was working an average of 43 hours a week and we decided to move her salary and give her more challenging special projects since she was such a great employee. She was at $32 an hour at the time. We were either going to raise her to $35 an hour or give her a salary of $80,000 (which is the equivalent of $35 an hour with 3 hours of overtime calculated in).  Since the day she was moved to salary, her attendance dropped drastically.  Only working 6-7 hour days on average with a weekly 3-4 hour day. We met with her several times explaining our expectations to at the least, work a 40 hour week and she is not following through.

We are a California employer and I am not sure of the regulations for changing an employee back to hourly after a short time on salary.

  • Can we move her back to the $32 an hour she was on before we gave her the promotion and salary?
  • Are we required to give her the equivalent of $80,000 salary at regular time (which is straight calculations $38.46 an hour)?
  • Can we just change her to $35 an hour so that if she works the 43 hours a week again she would meet that $80,000 mark?

Thank you for your help with this.

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  • Does anyone have any advise on this?

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  • Hello Sairah,

    I noticed that you do not comment on the employee's performance in her role after converting to salary.  Performance in many salaried roles is not driven by number of hours in the office but rather accomplishment of objectives and quality of decisions made.  How is she doing in the other factors of her role?  If she's meeting expectations and simply being more efficient... perhaps it's time to add more to her plate.  If she's not meeting deadlines or the quality of the work has dropped, I would recommend addressing it with her as a performance problem and focus on the outcomes you need.

    I always prefer to have the conversation around performance and outcomes and not about how many hours someone was in the office. 

    Grace

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  • By no means am I an expert in California law, however, I don't believe there is any law prohibiting you from lowering an employee's pay (unless it's under minimum wage). Also, you can change an employee from Salary Exempt to Hourly Non-Exempt. 

    I would be careful not to change anyone's status too many times as it may look funny in an audit.

    I would double check with an attorney just to make sure!

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    • Erin (Henry) Rastikis
    • No matter how you look at it, IT's "HR", c!?!
    • Erin_Henry
    • 6 mths ago
    • Reported - view

    Sairah, there are so many things to consider here. First, I'd recommend consulting a CA attorney. Second, in order to 'decide' to move an employee to a 'salary', (assuming you mean 'exempt' as you can have a salaried non-exempt employee and still be required to pay overtime over 40 hours worked in a week). Did you consider the DOL exemption tests? (Specifically, does the position 'warrant' such a move? Review this website from DOL https://www.dol.gov/agencies/whd/fact-sheets/17a-overtime)

    In an exempt role-we don't care how many hours a person works or how long it takes to get the job done as it's more about results.  It seems like you are trying to worry about the money and not the performance.  (Grace who commented on this post is correct as is Rebecca-showing too many status changes will leave the employer with greater liability).

    I'd be happy to talk more about it and can be reached at 937-321-1069.

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