Salaried-Non-exempt Compensation
6223963
2 Posts
I have several employees that at paid a biweekly salary but are non-exempt. Hurricane Ike came through Houston last week and our facility was closed for three days because of no power. The power was restored and all employees were requested to show up to work on Thursday, 9/18/08. Our company paid all of our salaried employees for the three days of no power. I had two employees who did not show up on Thursday or Friday. Can I payroll deduct the days missed?
Since the storm put us behind at work, we also had some salaried non-exempt employees come in on Saturday to work. Am I required to pay them overtime, since we were kind enough to pay them for the three days without power?
Help,
6223963
Comments
Here's a good general article:
http://www.payroll-taxes.com/Articles/salariesGeneral.html
"What if the employee works less than the expected number of hours during the workweek? In some cases there could be problems because in some states if an employee is paid a salary, his salary cannot be reduced if he works less than the expected number of hours. He is treated the same as an exempt employee. In those states the only way an employer can avoid paying the employee who works less than the expected number of hours is to make the employee an hourly employee. So employers must be aware of what state law permits."
Do you use fluctuating workweek? If so, this applies from the Texas Employer's Handbook: (http://www.twc.state.tx.us/news/efte/h_regular_rate_salaried_nx.html)
"If an employee is paid a fixed salary each workweek for hours that vary up and down from week to week, the employer may use an overtime calculation method authorized in 29 C.F.R. 778.114. This method is called the "fixed salary for fluctuating workweeks" form of computing overtime; this is the method that some companies in the past used to refer to informally as "Chinese overtime". It is easily the most favorable method for employers of computing overtime, but certain requirements have to be met. Many employers favor it because it results in a diminishing regular rate, and thus diminishing overtime pay, the more overtime hours there are in a workweek. For the same reason, many employees do not like this method. Moreover, the regular rate varies under this method from week to week, so some employers and employees do not like the unpredictability of this way of computing overtime pay.
To use this method, the employee must have a work schedule with fluctuating hours, i.e., not be on a fixed schedule, and must be paid a fixed salary that is meant to be straight-time compensation for all hours worked in a workweek, whether the employee works less than or more than 40 hours per week. With almost no exceptions, no reduction in the salary may be made for short workweeks. In addition, the salary must be large enough to ensure that the regular rate will never drop below minimum wage. In such a situation, the regular rate is determined by dividing the fixed salary by the number of hours worked that week. Now, here's where the importance of this overtime method comes in: since the fixed salary is already deemed to compensate the employee at straight time for all hours worked, any overtime hours only need to be paid at "half-time", instead of time and a half. Remember, the employee has already been paid straight time by virtue of the salary, and the straight time is only paid once, so the overtime hours will be paid at half the regular rate, thus bringing the employee up to time and a half. In workweeks in which the overtime is high, the regular rate will be low, and the employer will enjoy a lower per-hour overtime cost. The drawback is that if work is slow, and the employee is only working 25 or 30 hours per week, the fixed salary must still be paid. Useful examples of how to apply this method are found in 29 C.F.R. 778.114"
If you do not use the fluctuating workweek method, then you are only required to pay employees for the actual hours worked.
Then you get into the question of not paying because the employee didn't work at all during that week. That is one of the few deduction that is allowed even for Exempt Employees.
Most companies define their overtime calculation with an "hours worked (not including vacation/timeoff)". So no, I do not think you would owe any extra pay for Saturday.
HRforMe,
Thank you so much for all the information. It will help me to figure out what I need to do.
6223963