For Fewer Compliance Headaches, Avoid FLSA Status as a Reward Criteria

There are plenty of challenges involved in getting (and keeping) positions appropriately classifed as to their FLSA (Fair Labor Standards Act) status, so there is no reason that I can think of to make life even more difficult for ourselves by doing things like:

• Making exempt status a criteria for incentive plan eligibility.
• Providing a higher level of benefits (e.g., more vacation or PTO days) to exempt employees.
• Creating an artificial salary ceiling for nonexempt employees (e.g., reserving certain salary grades - such as Grades 10 and up, for exempt positions only).

Many of us already face pressure from employees and their managers who see the awarding of the "exempt" designation (despite our best educational efforts) as a status thing, an acknowledgement of professionalism, or - ironically - a way to get more money.  But we make the problem worse by creating - or exacerbating - this demand through turning exempt status into a hurdle that must be crossed in order to participate in the company bonus plan, get better benefits, or earn a competitive salary.

My message:  Delink!  Make FLSA status solely about compliance with overtime laws.  If you have reward programs where you simply must limit eligibility, you'd better find a different, genuinely business-related criteria to use instead.

Comments

[HR Wench]

Bravo and Amen! It is amazing how many discussions I have had to have with senior managers about this and they continue to NOT get it. It's like it is embroidered on their brain that exempt salary = cool kids club. Such a pity.

[Frank Giancola]

Ann,

Excellent insights! Suggest that you write a workspan article on the subject, since most people do not see the issues as clearly as you do and many would benefit from your thoughts.

Frank

[Ann Bares]

HRW:

Thanks for visiting and commenting. You're right - this is a tremendous educational hurdle, for reasons I have difficulty grasping. And not just for managers, but for employees who think being made exempt means that, finally, someone has recognized the level and brilliance of their contribution.

Frank:

Thanks for the thought. A workspan article, hmmm... Perhaps I should give that a go. I've gotten accustomed, via the blog, to writing in short bursts. It's been a few years since I did a full-fledged article. Would have to see if I still have the stuff...

[Frank Giancola]

Ann,

You might want to consider a "Best of Ann Bares" article which includes your insights on several topics---FLSA, broadbanding, and others. The common theme would be something like---starting off on the right foot in dealing with common compensation issues.

Frank