Dive Brief:
- With the Department of Labor's new overtime rules set to go into effect in 2016, Vanguard, the Malvern, PA-based mutual fund company, has reclassified 2,100 U.S. employees (out of its 14,200 global workforce) as hourly employees rather than salaried, according to an article at Philly.com.
- A Vanguard spokeswoman, Arianna Stefanoni Sherlock, told reporter Joseph DiStefano the change was "due in part to the anticipated Department of Labor regulatory changes, along with broader changes to our job classification structure."
- DiStefano then asked if the reclassified employees will "earn more, less, or about the same?" Vanguard was mum on the issue, instead saying it expected to continue offering a pay and benefits package "that is fair, reasonable, and competitive to all of our crew members whether they are hourly or salaried."
Dive Insight:
DiStefano posted Vanguard's answer online and received responses from dozens of Vanguard employees, spouses, and others willing to discuss what they believe will be the most negative repercussion:
A group of employees earning less $75,000 a year will lose typical year-end bonuses worth a few thousand dollars. And there are no assurances overtime will cover the loss (they are now eligible for overtime based on the new rules, which raised the exempt cut-off from $23,660 to $50,440, though the latter amount could still change).
The Vanguard experience is one that is sure to be repeated across the country prior to the new DOL OT rules going into effect during 2016. It is going to take some strategic thinking for HR and compensation leaders to figure out just how their organizations will manage the DOL changes, which are primarily expected to affect the sectors with lower paid workers.
