Changing an employee’s compensation structure from a fixed salary to an hourly wage is a legally permissible practice under certain circumstances. This typically involves reclassifying the employee from exempt to non-exempt status under wage and hour laws, meaning they become eligible for overtime pay. For example, a salaried marketing manager might be transitioned to an hourly rate for a project-based role with clearly defined hours.
This shift can offer advantages for both employers and employees. For businesses, it allows for greater flexibility in managing labor costs, particularly during periods of fluctuating workload. Employees, on the other hand, may benefit from earning overtime compensation for hours worked beyond the standard workweek. Historically, the legal framework surrounding wage and hour regulations has evolved to ensure fair labor practices and protect employees from exploitation. Understanding these regulations is vital for both employers and employees.