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We would like to reclassify an employee from exempt to nonexempt status. Is it okay to do this? What do we need to do to change their status?

Yes, it’s possible to make this change. Any employee can be classified as a nonexempt employee, although we generally recommend that all employees in the same role have the same classification.

That being said, exempt employees sometimes feel there is a certain “status” involved in being salaried and exempt. If you decide to reclassify an employee, aim to do so in a manner that does not denigrate them or cause them to become disengaged.

When reclassifying employees from exempt to nonexempt, it’s important to clearly communicate the change in writing, make the change effective in payroll and job descriptions, and communicate your policies and expectations that will be affected. You’ll also want to ensure that managers understand all applicable wage and hour laws impacting nonexempt employees and how they may affect their day-to-day work. These may include:

  • Taking meal and rest breaks
  • Properly tracking their time
  • Reporting any overtime worked

We also highly recommend that you implement this change with advance notice to the affected employees and with an effective date that falls on the start of a workweek and your payroll cycle. This gives you time to communicate your expectations and train your employees on the policies they’ll need to follow now. We recommend obtaining a written acknowledgment from the affected employees showing their understanding of these changes.

Still, have questions?
Contact Pro Advisor Support to answer your questions.

Clergy Financial Resources
Tax I Payroll I Bookkeeping I HR
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421.0101
Fax: (888) 876.5101

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com

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If you would like to learn more about our tax services designed for clergy or payroll, bookkeeping or HR designed for churches, please complete the request form to have an advisor contact you.

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