Exempt to non-Exempt to avoid severance payouts

Changing from exempt to non-exempt so not to have to pay Severance benefits ?
Is it legal for public US based company
with offices/employees worldwide - to abruptly just reclassify/change with only 1 week notice 100's employees from Exempt based pay (salary)
to non-Exempt pay (paid by the hour + overtime if needed) ?

I was hired into my salary job in Massachusetts with formal offer letter couple years ago saying paid on salary basis. Now suddenly they force-changed hundreds salary employees to hourly pay basis starting immediatley.

The company is hitech computer bunsiness in California and they just did this
for hundreds of employees. No choice was given to accept or deny it.

Also - by doing this change - is there any legal requirement to pay these (newly reclassified)
non-exempt (hourly paid) employees (used to be salary for years) any severance pay when/if fired/layed off
or there is RIF (reductioninforce) ?

They have in past given min 2 weeks severance pay per yr worked for severance. This company announced at least 6000+ people to be layed off over next year.
They just released an HR policy saying - non-exempt employees are not
eligible for severance pay.

Isn't this just shabby means for company to save huge amt of $$ to legally loophole around paying out tons of severance cash benefits to thousands of soontobe fired employees ?


1 answer  |  asked Dec 9, 2008 06:04 AM [EST]  |  applies to Massachusetts

Answers (1)

Judith Miller
wage classification

Whether an employee is exempt or non-exempt from the payment of overtime is determined based on the requirements of state and federal law, and is not an internal company decision. It may be that the employees who were reclassified from exempt to non-exempt should have been paid overtime all along, and such employees might have a claims for overtime wages. Severance pay, on the other hand, is not a requirement of either state or federal law, so an employer can set the policy in whatever way it chooses (or it does not have to pay any severance at all). Please call me if you would like to explore the overtime issue further.

posted by Judith Miller  |  Dec 9, 2008 08:46 AM [EST]

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