Exempt wants to work a few hours at an hourly job.

Posted this on wage and hour and got no action....

I have an exempt shift manager who has taken black jack lessons. Now that he's passed his audition, management wants him to deal in a tournament tonight. I told y'all that during special events, exempts volunteer time to help out in other areas - I bartend - we get and are allowed to accept and keep tips. The only way I can think that this exempt employee can deal is by "volunteering" and do it without pay but keep his tips. I think there's all kinds of pits here, but can't see the forest through the trees. HELP!

Comments

  • 13 Comments sorted by Votes Date Added
  • I saw this and did not respond because there were so many other threads about exempt volunteering. Now that my excuse is posted, here is my humble opinion:

    An exempt cannot be paid for doing other work, even if it is not their normal work. The tips part is a new twist. If you do it like other businesses who regularly deal with tips, I think you must make an attempt (maybe have the dealer declare them) to account for the amount, stick it in payroll and get the withholding and other payroll taxes handled that way.

    If it is your company's event, that's what you should do.
  • Marc, why can't exempts be paid for doing other work? Many companies, ours included, pay exempt ee's additional compensation for hours in excess of 40 per week. For example, we pay straight time for all hours over 44. How is Leslie's example different?
  • It is my understanding that you jeopardize the ees exempt status if you do this. The employee can work the exempt ees '25 hours a day and 8 days a week' to paraphrase a quote often posted by Pork. If you want to compensate the exempt ees for 'extra' work, you can still get there a couple of ways. One way would be do cut them a bonus check, but be careful about making a direct tie between the hours worked and the check. Another would be to estimate the number of additional hours for the year and build that into their salary. Make sure the exempt ees know they are expected to work this additional time and that it is built into their fabulously large salaries. There are several threads regarding this topic that delve into this area in great detail.
  • MARC: THANKS, for reading my stuff! I believe the best thing to do here is for the company to provide a "thank you bonus" for the extra special tournment participation. Are there not UNION ISSUES here? Why would you not let the labor ees have the opportunity to make this income, just because I have my certification should not give me the opportunity to earn money at a special company event, when there are qualified labor ees available! What ever you do IRS want their take and that includes tips income....DOL says you can pay the ee as a labor person but why would you want to do that when the ee is willing to volunteer? It is the TIPS thing that gives me concern.

    PORK
  • I reviewed one of those other threads and found a post by Hatchetman that contradicts what I just posted. So here is the quote from the other thread attributed to Hatchetman.

    "Regrding the exempt, salaried managers working extra days, you may pay them, under DOL interpretation of 541.118(b), overtime, even hourly, either as "cash" or as comp time.

    DOL's concern is at no time is the salary improperly docked while doing this. Of course, there is an arguable case to be made that in some federal circuits, that approach could result in the mployee being considered as non-exempt.

    One way to handle this extra time (more than what the basis salary is intended to cover) would be to base the extra compensation on the fact that an extra day has been work and provide an extra day of salary or comp time (thus there is no counting specific extra hours worked). Another, as others have noted, would make it as a bonus arrangement. But again, technically, under DOL Opinion you could pay the salaried, exempt managers hourly for the extra time (straight, time and a half, or in any manner you want)"





  • Yep, I agree with Hatchetman. When we were questioned about our OT policy for exempt ee's, I called first the state DOL who referred me to the Federal DOL who said they didn't care how we paid additional comp to exempt ee's as long as we paid them at least 40 hours per week.
  • I don't see why you couldn't pay a "bonus" for the time spent. It should not be paid out as hourly wages or called overtime pay, but I see no reason to pay an exempt employee more than their contracted amount. I think I would consider it a "thanks for you effort so here's a little something" type of bonus.
  • I don't see any problem either. It is common in some industries to pay exempt supervisors extra - straight time is common - because failing to do so means that they make less money than the employees who work for them. In such circumstances there is a pay policy in place so that it is admininistered consistently. I don't think that there is a problem with bonuses or tips.
  • [font size="1" color="#FF0000"]LAST EDITED ON 10-04-03 AT 06:45PM (CST)[/font][p]Leslie,

    DOL's reference to "any other basis" (below) would seem to allow both volunteering in the sense you describe it, and payment from tips (IRS issues are, of course, different).

    ". . . additional compensation besides the required minimum weekly salary guarantee may be paid to exempt employees for hours beyond their standard workweek without affecting the salary basis of pay. Thus, extra compensation may be paid for overtime to an exempt employee on any basis. The overtime payment need not be at time and one-half, but may be at straight time, or on any other basis." D.O.L. Wage & Hour Opinion Letter No. 1738(?) (April 6, 1995).

    This would perhaps not hold if 1) the person is is being paid for a standard workweek less than 40 hours and less than industry standard, and/or 2) the additional and non-exempt work became a significant portion of the person's total work.

    You might want to check with counsel to be certain that this is still the DOL standard, and to check whether there are state regs that might apply.

    Regards,

    Steve Mac

    Steve McElfresh, PhD
    Principal & Founder
    HR Futures
    408.605.1870
  • This isn't a scenario where the guy is volunteering upon being asked - he is asking to do this. The tips in this situation could make a lot of people think about giving up their day job. So I'm not worried about any wage for the extra hours worked. It's at his request that the extra hours are being worked.

    My only real questions were does it jeapordize his exempt status, and the answer seems to be no.

    Now, my last question is - could he come back at us later and state he should have been paid for these extra hours?
  • I would say no, but if you are worried about it, have him sign a waiver indicating his understanding of the volunteer nature of the job. We do that for all of our fundraising activities when we deal we non-exempts. We do not make the exempts do it, because they are exempt - but I do not see any harm in doing either.
  • Right. "Volunteering" or not does not change the answer. Reading a little between the lines, it appears that this person wants to do this for experience, pleasure, and/or tips. But it does not have to do, as I hear it now, with any community or charity event.

    I would suggest something like what Marc indicated, though I would not call it a "waiver" since that implies a right which the person is waiving. It would simply specify everyone's understanding, e.g.: that he is doing this in his role as a shift manager to extend his knowledge of the work, that as a result it involves no additional pay from the employer, and requiring of him whatever is your normal policy with regard to reporting tips.

    Regards,

    Steve Mac

    Steve McElfresh, PhD
    Principal & Founder
    HR Futures
    408.605.1870
  • He's doing it for the money - tips. As I said they are of such an amount that it's making a lot of my exempt people think about training and moving over - it's frustrating to see a dealer with little responsibility making more money than they do.

    However, the full time staff is set, so all that is available is what we call extra-board dealers - dealers with no set schedule who fill in when there's a need. I have a feeling if this shift manager does well, and a full time position becomes available, he will request the transfer. He will not do that, though, untill it's full time.

    In the meantime, I will type up the declarance have him sign and go from there.

    Thanks all1
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