exempt/non-exempt
dennis
5 Posts
Our COO wants to decrease her schedule for the summer to 30 hrs/wk. She suggested that she supplement her schedule with paid leave but our policy requires exempt employees use no less than a full day of paid leave when absent from work, partial days are not recorded for paid leave. The CEO has authorized the decreased schedule if her position is re-classified as non-exempt and paid on an hourly basis. She will increase her schedule in the fall and again be re-classified as exempt at that time.
My recommendation was to leave her position classified as exempt and allow the temporary reduced schedule. My concern is if we re-classify her position as non-exempt we are jeopardizing the exempt status for this position. Thanks.
My recommendation was to leave her position classified as exempt and allow the temporary reduced schedule. My concern is if we re-classify her position as non-exempt we are jeopardizing the exempt status for this position. Thanks.
Comments
Why not keep her as exempt and just pay her by the hour?
Our employee classification system would not allow us to reclass her to non-exempt at her level, but if yours does, I don't think that it would jeopardize the exempt status of her position, but I would check with an expert.
You can also reduce the pay per the method you describe, but just to reiterate, you can pay exempt positions by the hour.
Good luck,
Dutch2
Secondly, if the reduction in hours is only temporary, and she works part of the day, you still have to pay her her full salary. DOL has issued formal Opinion that a temporary reduction from full time to part time does not result in a temporary reduction in pay, especially if the employee is working partial days (remember, you may not dock salary for partial days' absences).
If the reduction were classified as permanent, then you could reduce the salary in a pro-rated amount to match the reduction to a part time schedule.
I would welcome the questions of the CEO when making HR decisions. They are ultimately responsible for ALL the decisions made in the company. If they are involved in HR issues I would bet HR gets involved in their issues. I think that's the way it should work.
Shadowman, first thank you for your kind remark.
The employer may NOT pay a salaried exempt (white collar) hourly because the three traditional white collar exemptions, executive (541.1), administrative (541.2) and professional (541.3) as well as 541.118(a) require that the exempt white collar worker be paid a salary, which is defined basically as a fixed compensation for a set period of time without regard to changes in hours worked or quality of work. You're not paying for time; you're paying for the job that needs to be done.
If you pay as an hourly, you defeat the salsry requirement since 1) compensation would depnd on the nubmer of hours worked and 2) you would wind up most likely violating the prohibitions again docking salary for partial days' absences. Paying a salaried exmept on an hourly basis for the base compensation, would render the position and employee as non-exmept.
The link is:
[url]http://www.access.gpo.gov/nara/cfr/waisidx_03/29cfr541_03.html[/url]
As I said above, there are some exempt positions that may be paid on an hourly basis as specified by FLSA and the related regulations. But other than that exempt positions have to be salaried.
When you say "an employee wants to use 2 hours of paid vacation time" isn't really germane (what employee would give up vacation time if he or she didn't have to). In effect, what you are asking is whether an employer may charge a salaried exempt employees' accrued time balances to "recoup" the pay-out of salary for the time missed to due a partial day's absence. The answer is "yes", except in some states to varying degrees.
DOL has issued formal opinion holding that accrued time benefits such as PTO or paid vacation or paid sick time banks are fringe benefits and do not fall under FLSA. Thus, as long as the exempt salaried employee receives his or her full salary for the day in which the employee was partially absent, the employer may chanrge the accrued time balance. And if there is no time left on the books, the full salary still has to be paid.
I always try to point out that the docking of an exempt salary is addressed in 541.118a and is independent of whether or not the employer charges accrued time balances for partial days' absences, which is an employer policy/practice issue.
I said that in some states charging the accrued time balances may not be permitted to varying degrees. For example in California, accrued PTO and paid vacation time and any other accrued paid time that may be used for ANY reason by the employee is considered deferred compensation, not a fringe benefit, and may not be lost once earned. Thus California prohibits an employer from charging these accrued paid time balances in order to recoup the pay-out of salary for a partial day's absence. On the other hand, it does not prohibit the employer from charging a paid sick leave time balance that may only be used for absences due to illness or injury in order to recoup the loss of salary for a partial day's absence due to illness or injury (or doctor's appointment). Other states have similar prohibitions to one extent or another. Most states, however, follow DOL's Opinion.
For example, let's say a salaried employee takes 1/2 day of vacation. The employee would receive 36 hours of regular pay and 4 hours of vacation pay. They would still receive their full salary but it would come from two different "sources". Are you saying that the employer can not charge that California employee's vacation accrual for the 4 hours? That a Cal. employee's vacation accruals may only be charged for full days (8 hour increments)? So if the Cal employee leaves work 1/2 day early or 1/4 day early to go play golf, we can't count this against vacation time that they have already accrued/earned?
Under FLSA if a salaried exempt works any part of the day, he or she must receive the full day's salary for that day. That's clearly stated in FLSA. Yes, I know about reduced FMLA leave and public sector.
In California, when a salaried exempt employee works any part of a day, he or she must be paid the entire day's salary. California does not permit the employer to charge the PTO or paid vacation time account to recoup the pay out of the salary for the hours that were not worked during the partial day's absence.
So, when you say that 36 hours comes from salary and 4 hours comes from accured PTO, that is NOT correct. In California, all of it comes from salary and the employer MAY not charge the salaried exmept's PTO or paid vacation time for the four hours absence.
In order for a position to be exempt, of course, it must meet one of the exemption criteria if a white collar position including being a salaried job. If a white collar job or any job which FLSA requires to be salaired in order to be exempt along with meeting the job duites' requirements is paid as an hourly, then it loses its exempt status as to overtime and minimum wage for as long as it is paid as an hourly.
However, FLSA expressly permits some positions to be paid as hourly and still be exempt from overtime requirements and minimum wage. I noted above that FLSA permits, doctors, lawyers and school teachers who practice in those fields to be paid as hourlies but still be exempt (the employer still has the option of making them salaried, exempt). Then there are some jobs that may be allowed to be paid as hourly and still be exempt if they meet certain wage rate. For exsmaple, "computer professional" who meets the duties criteria in the regs for exemption, may be paid on an hourly bais if the rate of pay is at least $27.63 (except where the state prohibits it or requires a higher rate of pay). And FLSA identifies certain "domestic" jobs that may be paid by the hour but still be exempt.