Unusual question

System

A friend of mine called me today to tell me about a situation his wife just encountered at work. She was hired at the beginning of the year as her company's office manager. They offered her a salary of $45,000 per year. They just approached her and said that the rate of her pay throughout the year was somehow miscalculated, and that she has just now reached her promised compensation level of $45,000, and because she has received her promised salary, she would have to work the remainder of the year without pay. It was apparently said in a somewhat joking yet serious manner, so she's not sure if they are really going to go through with this "threat" of work but no pay or not. He asked me if that was legal, and if they follow through, what recourse do they have. I can honestly say I have never encountered such a situation. My initial reply was, assuming she meets the definition of exempt employee, and has recieved her promised salary, the question then hinges on whether her job was to be done in 12 months, or 10.5. Its just goofy as hell and I really don't know what all the legal ramifications are. Any ideas or insight into this wierd situation. I told him to call the DOL/wage&hour and get thier perspective on it, but I'm curious to hear what any of you might offer.

HRQ

Was there a written job offer? I suppose if it says $45,000 annually, then they've met their obligation, I think. See what the wording is - there may be something in there that clarifies.

If they seriously plan to make her work without any more paychecks for hte rest of the year, I suggest she argue it, and if she gets nowhere, seriously consider finding another employer.

They may argue that she should have noticed and reported it - but they should have noticed too.

What's "correct" vs. what's "right" can be two different things. As the HR person, I'd argue that we should negotiate a reduced bi-weekly salary through the rest of the year. Kind of meet her in the middle. She'll still be overpaid for the year, but she won't suffer, and we'd keep what I assume is a good manager.

System

Apparently no offer letter was provided. I don't know if they even have an HR dept, so there appears to be no employee advocate on this. I'm curious as to the legality of their possible actions.

HR In NH

This is an unusual question! I'm assuming this person is salaried, or otherwise it would clearly be a violation of law.

I did some researching under the FLSA and I still believe the DOL would consider this a violation.

541.602 states that an employee will be considered to be paid on a "salary basis" within the meaning of the regulations if the employee regularily receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee's compensation. An exempt employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked.

While this definition is intended another way, I think it still addresses this issue sufficiently enough. An employer can not expect someone to work for 6 or 7 weeks without pay, just because they made a mistake. It comes down to their "mistake" that is causing the employee to suffer. Granted she received extra income the rest of the year, but she reasonably relied on the expectation of further pay through the year. Many employees do not look at their pay stubs and it was the employer's responsibility to pay her properly.

That said, I also can not imagine suggesting this as a viable alternative to their mistake. If they are serious, I would definitely look elsewhere, because who knows what else they are doing.

I think it would be reasonable to offset any future salary increases by this $9000 accidental pay increase, but that's it.

System

Thinking about it even further, isn't there language that stipulates that no given pay period can exceed 1 month? If that's the cse, she would not be receiving her minimum amount of required pay (at least $455 per week, over a 4 week period). On the other hand, don't we expect our employees to come forth with pay overages when they occur? We certainly hear about the times when they are shorted. So does the fact that she failed to point out the overpayment somehow mitigate any requirement to keep paying her for services through the end of the year? And when will I stop asking myself questions I can't answer?

lnelson

First she needs to find out if they were serious. Once that question is answered then you can proceed.

If they were serious.
I believe that an exempt ee must be paid for a workweek no less than the min wage of 455/wk no matter what. They can adjust her salary for the following year accordingly. Have her call the DOL/wage & hour for clarificatin.

davids

Like everyone else, I am really not sure what the legal answer is. She should probably consult an attorney who specializes in wage and hour complaints in her state.

Having been in the public sector most of my career, we always require employees to repay overpayments (since it is the public's money). However, we would always be willing to work out an equitable repayment plan that deducts portions of the overpayment (10%, 20%, etc. depending on how large the overpayment is) from successive pay checks. We would never expect an employee to work two months without pay.

I do think you friend has some responsibility in this matter. Irrespective of whether she was paid weekly, biweekly or monthly, the overpayment was significant enough that she should have noticed.

E Wart

I take it from your write up that she was paid more each pay period than she should have been paid and therefore paid her $45,000 before 12 months. This is another reason why I URGE my supervisors/managers to never quote an annual salary, but just what the exempt employee would be paid for a pay period, whatever that might be (or an hour if they are non exempt). I find it hard to believe that your friend (if she was an office manager making $45,000 per year) didn't realize she was being over paid. I would check this out first and make sure the employer is right about this and if she doesn't get the same figure, ask them to show her how they calculated her salary.
I would get her to sitdown with someone and first find out if they are serious, if they did over pay her, and if so, what can be done (that is legal and also fair to both parties) to fix it.
Also, I believe everyone is correct, she should be paid at least the "minimum wage" for an exempt employee if she works any during the pay period. What a mess.

E Wart

Caroliso

vphr, this was indeed an unusual question. Can you tell us how this turned out?

System

I haven't heard back from him. My guess is that the company did not follow through on their threat to require his wife work out the year with no further pay. I'm convinced there is more to the story than was presented to me........but that never happens in HR does it?