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Employment law question (moving from salary to hourly)

P. Bateman

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I was just notified by payroll that some new federal rule mandates entry level people have to be hourly and not salary, so at my current level I've been moved from a salary to an hourly paycheck and I qualify for OT if I work >8 hours in one day (CA law).

However, the company is withholding 1/2 of one paycheck of each employee affected to cover the OT hours pool. When the employee leaves the company or is no longer on an hourly payscale that withholding is returned. Is that legal? They're holding half of my paycheck indefinitely and not paying interest. I don't think I nor any employee should be held responsible for floating the company's OT funds pool.

Thanks.
 

hendrix

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sounds dumb to me but if it's only half of one paycheck (assuming weekly or fortnightly paycheck) it's not gonna be that much money in the long run.
 

crazyquik

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I'm not an employment lawyer (* and this is no legal advice * ), but:

#1 - I've never heard of such a federal law, and it sounds stupid (I don't put that past the parties in Congress though). Ask (nicely) for a copy of it.

#2 - go find a plaintiff's lawyer that handles employment law and offers free consultations; or, look online/in the yellow pages for an employment lawyer and on the phone tell them you think you might have a class action or at least several plaintiffs. Even if it's 'only' .5 of one paycheck, if it's several people at your company the work by the lawyer can be amortized/shared between plaintiffs. Also, there may be a federal fee-shifting statute that requires the losing defendant to pay the plaintiff's attorneys fees.

If the company is small, it sounds like they just caught a case of the dumbs, and didn't realize they were breaking the law. Even if this isn't against a wage & hour or federal employment law, it could still be considered an 'unfair and deceptive trade practice' which typically has a fee-shifting provision in it. Call a local attorney; it's no commitment to call or if they give free consultations.
 

dragon8

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Sounds like BS is right. Under CA law, if you've earned it you get it.
 

scurvyfreedman

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The rules on overtime status (FLSA non-exempt) are mutl-tiered. But, it's not automatic for entry level if the entry level requires specialized education. There are professional exemptions as well regardless of whether it's entry level or journeyman status. I'm unaware of any new FLSA regulations that have just taken effect. Seems to me your company just realized that it was doing things wrong and is trying to correct them without you suing them for overtime you are owed already.

I've also never heard of holding back money you've earned to pay you for money you will earn later. Without a union the FLSA exempt employees can have their salaries reduced. But for FLSA non-exempt you are paid hourly. The company can't not pay you for your hourly work to give itself a loan. The company has to pay you for all of your hours worked and all of your overtime hours at 1.5x the hourly rate. It can't dock you 20 hours of pay to pay you for later time worked.
 

P. Bateman

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Thanks guys. I've consulted two lawyers and they said the same as many of the posts here. They can't point to a law necessitating the change from salary to hourly and doubt it exists as this is such a subjective classification. Second, they agree I if earned it, I get it and I can't be forced to loan the company money.

I estimate this affects roughly 300-400 people at my company. This is one of several recent actions that have left me questing the management so rather than be a martyr, I'm going go look for something elsewhere and leave my relationships intact. By paying out the the withholding when leaving the company they're incentivizing leaving, so I'm going to take them up on that.
 

Joenobody0

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My company recently switched all entry level people to hourly. There was some issue with one week of pay (as you suggest, though explained differently to me), but my company covered the held back portion out of their general funds - they essentially gave everyone a free week of pay. This switch was run through, and at the direction of, our very large legal department. I don't think this is in any way illegal though I do not follow what you were told.
 

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