Legal Considerations for Reclassified Employees
By Joy Lynn Hyer, SPHR, SHRM-SCP, CCP Senior Compensation/Survey Analyst
Published August 13, 2024
If your organization has employees who were recently reclassified from exempt to non-exempt due to the increased salary threshold under the federal Fair Labor Standards Act (FLSA), these employees and their managers may need education and training to comply with newly applicable organizational policies and state and federal regulations.
Meal Breaks
Illinois law (One Day Rest in Seven Act, or ODRISA) requires employers to provide non-exempt employees working a seven-and-a-half-hour shift or longer with a twenty-minute meal period beginning no later than 5 hours after the start of their shift. An additional 20-minute meal break must be permitted if working a 12-hour shift or longer.
While an employee cannot be forced to work through a meal break, if an employee does work through their break, they must be paid. If the break is going to be unpaid, the employee must be completely relieved of all job duties and the meal break must be at least 30 minutes to comply with the FLSA.
An employer’s failure to enforce a work-free meal break could have implications beyond a technical violation of ODRISA and may even lead to violations of the FLSA.
Scheduling
ODRISA prohibits organizations from scheduling non-exempt employees to work seven consecutive days and mandates at least 24 hours of rest every seven days. Organizations can apply for an ODRISA permit from the Illinois Department of Labor (DOL) to allow employees to waive their rest period. However, such permits do not authorize employees to work seven days a week for more than 8 weeks a year, unless the DOL Director determines that the need for work on rest days cannot be resolved by hiring more employees or adjusting schedules.
Timekeeping
Regardless of an employee’s status as non-exempt or exempt, Illinois employers must keep records of hours worked for all employees as directed by the Illinois Administrative Code Section 300.630 Records and Notice Requirements:
a) Regardless of an employee's status as an exempt administrative employee, executive, or professional, every employer shall make and maintain for not less than 3 years the following true and accurate records for each employee: name and address, hours worked each day in each work week, the rate of pay, copies of all notices provided to the employee as required by subsection (d), amount paid each pay period, and all deductions made from wages or final compensation.
For non-exempt employees, this means their start and end times must be recorded as well as their meal and break period times.
Remote Work
If you have a hybrid or fully remote workplace, your policies on remote work may need to be adjusted to ensure non-exempt employees are properly recording all hours worked, including those worked off-site and on evenings and weekends.
Overtime
The FLSA requires employers to pay non-exempt employees not only minimum wage but also overtime pay for all hours worked in excess of 40 hours in a workweek. The overtime premium is not less than one-and-one-half times an employee’s “regular rate” of pay per hour. Under the FLSA, the regular rate includes “all remuneration for employment paid to, or on behalf of, the employee.”
Overtime pay may not be waived by any employer/employee agreement and is calculated based only on payments to an employee that are required to be included in the regular rate of pay. An extensive list of exclusions from the regular rate may be found in the regulations at § 778.200 Provisions governing inclusion, exclusion, and crediting of particular payments.
While reclassifying employees from exempt to non-exempt offers them potential overtime, some may consider it a loss of status and feel impacted by a loss of flexibility or employee benefits. Employers should communicate that all jobs, regardless of employment status, contribute to the organization’s success.
If you have questions about reclassifying employees, contact us at 800-448-4584 or info@hrsource.org.