exempt vs non-exempt status in a public organization

cabernet

I am aware that there are some differences between exempt and non-exempt rules in the public sector as opposed to the private but I have some questions about how we categorize our exempt emoployees (we are a public employer). Can I get some feedback if we are putting exempt status at risk for the following treatment of our exempt employees?

All exempt employees have their pay expressed as an hourly rate in the HRIS, in their paychecks, and offer letters.

We have a time tracking system that we use to track time worked on differemt types of work activites and also employees are paid from this system. Exempt employees are not allowed to enter more than 40 hours a week into this system regardless of the number of hours worked and are never paid for more than 40 hours.

Exempt employees are not provided compensatory time off for hours worked in excess of 40 hours per week. Exempt employees must take PTO for any time absent from work regardless of the number of hours they work in the week or the two-week pay period.

Hatchetman

[font size="1" color="#FF0000"]LAST EDITED ON 04-07-03 AT 07:05PM (CST)[/font][p]I've been in public sector HR work for almost 24 years in California. And there is always new stuff that I keep coming across ("Gee, can we really do that?") , so don't think your question is basic to all public sector or even private sector HR people. It's taken me several years to work out osme of my understnading of the FLSA regulations. I assume there is no issue at all about the appropriateness of classifying the employees as exempt -- that is they are performing exempt duties and they are salaried except as noted below.


[b]1. "All exempt employees have their pay expressed as an hourly rate in the HRIS, in their paychecks, and offer letters."[/b]

A white collar exempt employee has to be salaried except for the few exceptions, such as doctors, lawyers, school teachers, and computer professionals.

Under the Code of Federal Regulations, Volume 29, Section 541.118(5)(d) other salaried exempt employees (managerial, administrative and professional)may have partial salary docked for partial days' absences in some situations beside intermittent FMLA if that is the public jurisdiction's policy without jeopardizing the salaried status and the exempt status.

The link to the FLSA regulations is:
[url]http://www.access.gpo.gov/nara/cfr/waisidx_02/29cfrv3_02.html[/url]

The critical issue is how you actually pay the exempt employee. While having an exempt employee's compensation expressed in hourly units doesn't automatically render the employee as non-exempt, it may help establish the public agency had that as its intent if it should accidentally pay the white collar, salaried employee by the hour or improperly dock pay outside of what "5d" may provide.

In the long run, it is not a good thing to do -- express the salary as an hourly rate as part of the job offer. It probably isn't a problem if it's kept internal to the payroll system or even put on the check if it is to help the employee identify how partial day's docking, such as under FMLA was calculated. You certianly should show the monthly or weekly salary if you're going to show an hourly rate on the paycheck.


[b]2. "We have a time tracking system that we use to track time worked on differemt types of work activites and also employees are paid from this system. Exempt employees are not allowed to enter more than 40 hours a week into this system regardless of the number of hours worked and are never paid for more than 40 hours."[/b]

As with exempt employees in the private secotr, the public sector empleyr may have the exempt emplyee track time for a number of reasons...billing, accountability, etc. as long as the tracking doesn't result in the amount of pay to be issued, except as the jurisdiction has as its policy/practice to implement "5d."

FLSA and DOL aren't interested as much in whether an exempt emplyee is paid for hours worked beyond what th esalary is intended for. DOL wants to make sure that improper deductions to the salary are not made -- those CAN result in jeopardizing the exempt and salary status.

However just for your additional consideration, DOL has no problem with an exempt employee being paid overtime, as a flat amount, a bonus, or even in hourly increments, as accrued time or "cash." It's the improper docking that it watches. Take a look at at 29CFR541.118(b). There are also some DOL Opinion Letters issued in 1995 that expound that as its policy.

[b]3. "Exempt employees are not provided compensatory time off for hours worked in excess of 40 hours per week. Exempt employees must take PTO for any time absent from work regardless of the number of hours they work in the week or the two-week pay period."[/b]

FLSA in general at 29CFR541.118(a) does allow docking of a public or private secotr exempt employee's salary for full day's absences due to personal reasons or for illness or disaiblity if there is a sick pay mechanism of some kind. Of course, "5d" specificllay allows it for partial days absences for public sector as well.

DOL has taken the position that accrued time benefits are a fringe benefit. Thus if the exempt employee is absent for part of the day, while the day's salary must be paid if not on intermittent FMLA (other than what "5d" may call for), the employer is free to charge those partial day's hours of absence against accrued time banks without jeopardizing the exempt status. It requires that if the employee has exhausted the time that he or she still receives the full day's salary.

However, some states and one or two federal appellate districts don't permit it. In California, for example, both PTO and vacation time, when they are not pegged to specifc conditions of use, may not be charged for partial days' absences of the exempt employee.

Well, these are just a few of non-lawyer thoughts on this. You should probably consult with your public jurisdiction's legal counsel, especially on the first issue. Also, check your state's wage and hour laws or laws that specifrically address public sector employment in your state. Those may set higher "protective standards" than what FLSA permits (with the idea that those state laws are providing more protection to the exempt employee than FLSA does).