Opinions Please

Due to the recent impending new FLSA regulations, I'm performing a self-audit to make sure that all of the people we have classified as exempt... are. There are a few employees, however, that need to be switched to "non-exempt".

Right now we have 2 classifications of employees: "Exempt" and "Hourly".

Now my boss wants to add a 3 classification of employees: Salaried with OT because he is afraid that employees will feel that they are getting demoted (I wish I could be so lucky as to qualify as non-exempt).

I am totally against this and we are having heated debates over the subject. To me, this would just add more confusion to the issue because it would seem to the affected employee that they are "guaranteed" a "salary" instead of being paid for the "hours" they actually work which is what is going to happen. I could just hear it now when a "salaried with OT" employee works less then 40 hours.... All HELL will break loose because they weren't paid their "salary" and I will be the one who is dealing with screaming employee.

Your thoughts and opinions PLEASE. He told me to ask around to see what everyone else is doing.

Am I wrong here??? x:-/



  • 19 Comments sorted by Votes Date Added
  • I don't have a magic answer for you - I'm sure Don will, though. But, I do think the concern is justified. Some people see their exempt status as a badge of honor - a mark of being a professional. And they may resent being the appearance of being demoted. And I agree with you, the first time a salaried with OT ee receives less than 40 of pay, they will be mildly perturbed at the least.
  • [font size="1" color="#FF0000"]LAST EDITED ON 05-07-04 AT 08:32AM (CST)[/font][br][br]Sounds as if you're mixing tomatoes and potatos. Positions are classified either as exempt or non-exempt. People, on the other hand, are paid in a multitude of ways, including; hourly, salaried, salaried plus overtime, salaried plus bonus, etc. Anyone guaranteed a salary, whether exempt or non-exempt is guaranteed at least that minimum. You guarantee a salaried, non-exempt employee a weekly salary and still you're required to pay them overtime.
  • [font size="1" color="#FF0000"]LAST EDITED ON 05-07-04 AT 08:37AM (CST)[/font][br][br]So if we pay an EE as "Salaried with overtime", they are guaranteed 40 hours of pay even if they only work 35 hours?
  • My assumption is if you are paying someone a 'salary', you have told them that you will pay them, for example, $400 per week. To me, that's what salary means. Its an agreement, a contract, a guaranteed amount. Is there another way to have a salary arrangement at your company? Give us an example of how you would state someone's salary to them on their first day of work.
  • LF: The solution to your issue with your boss and the NON_EXEMPT salaried employee is already in the FLSA under FIXED SALLARY WITH A FLUCTUAING WORK WEEK! PART 778.114

    I have used this provision for those positions where it might be a "little gray" as to having decision making aspects of the job yet doing lots of physical activity which would classify the person/position as non-exempt. In these cases we choose to say we know this job is going to take 50 hours a week, and we are willing to pay this salary amount for you to do this job. We estimate the position will require 50 hours a week and if you get the job done in less than 50 hours then you'll still get the same salary. In otherwords develop your own efficiencies for the job and get paid for it. On those rare occasions when we exceed the 50 hours we will increase your salary to compensate for the additional hours.

    You must set this up inaccordance with the provisions of 778.114 which basically is 40 hours of regular time + 10 hours of O/T added together gives you the salary to be paid every week for all ours worked in the work week at 50 hours and less. Under the new rules all salaries will have to be no less than $XXX.XX (not positive of this figure at this moment, but I believe it will be $455.00 per week)as the short test. Our three employees on this system are all over that number and when we start a new person in these positions I will have the minimum test number for sure!)

    I have talked with my friend in the Fed wage and hour office here locally and his personal assessment of the new FLSA, if it gets funding from congress will have little impact on our operation with the exception of these three positions. We, apparently,will be included in the new one as an operating agriculture operation, where we were not previously. We chose to operate under the FLSA because we have to be competitive with all other commerce activities. If we did not pay O/T we would not be able to land good candidates or retain anyone for very long.

    Hope this helps!

  • We created a special classification of "Salaried Non Exempt" as a morale booster for a and it's been a horror. What happens is that they have all the perks of exempts but if they work an extra 30 minutes, Overtime!! We have grandfathered the present employees classed as Salaried - Non exempt, but have ceased designating any additional Salaried Non Exempts.
  • Ethel: Other than working untold numbers of hours without additional pay, what are the perks for being exempt?
  • Speaking for our company only: On exempts because they can have the honor of working 50 hrs or whatever it takes to get the job done, we are pretty loose on employees leaving to take care of personal business, even for whole days, we do not charge exempts STD total time if they are ill under a week, some authorized useage of company long distance lines, etc, etc. Not Huge perks, but stuff that make life a little easier.
  • In my company we’ve practically been forced by the DOL to use the non-exempt salaried classification. This was due to a wage complaint in which we paid out some back wages (overtime) on several employees that DOL said should have been hourly employees.

    When we made the conversion of our exempt employee to non-exempt employees, we provided the impacted employees a memo of understanding about the salary being guaranteed and how the overtime rate is computed. In reality, the system discourages overtime usage since the more overtime an employee works, the lower the overtime rate becomes, and this can sometimes be a negative when we need employees to work overtime in peak times. On the other hand it can be positive when down times are worked and the employee has assurances of receiving a full “salary” for the workweek. As I understand the DOL/FLSA regs, this system of pay is not in compliance unless there are occasions that the employee does not work the full 40 hour week. From my point of view, if you can accomplish the changes you suggest, with only reclassification to an “hourly employee status” life will be much simpler. Good luck with the change – whatever it may be.
  • We have that salaried, non-exempt category of employees. They are paid a regular salary every two weeks and if someone works fewer than their scheduled hours (we don't work a 40 hour week), it is docked two weeks behind. Overtime is also paid two weeks behind. Our employees don't have any problem understanding that they are in this category, BUT (and this is a wide-load but)they were never exempt employees. If your boss's intent is to take currently exempt employees and move them into this category, I would think most of them will get over the perception of loss of status when they realize what they are earning in overtime. We had this problem a few years ago when paralegals were moved from exempt to non-exempt. They don't mind it now, but it was a rough transition.
  • About 6 months ago, we reclassified some of our Technicians from exempt to hourly. They only complained for 1 day... until they received their next paycheck with included OT.

    The employees will still accrue the same amount of vacation and personal time. They still pay the same amount for health insurance and are entitled to all the same benefits.

    I really don't understand why he's putting up such a barrier on this one. You either get OT or you don't. It's black and white that they. I don't like grey areas, they get you into trouble.

    Speaking of which, before I was hired, they were fined and got into trouble with the DOL because of improperly classified employees. You would think, once bitten, twice shy....

  • Other Perks: Exempts don't get paid HOLIDAYS, they take off on the HOLIDAY or reschedule some other day. The Non-exempt gets paid for the holiday and gets paid for the hours worked on a holiday, thus creating "DOUBLE TIME", the exempt just works and smiles while he/she is doing it.

    One soldier boy a hourly truck driver collected 7 paid holidays for the year in IRAQ, the soldier boy a manager colects zero for the same holiday while in IRAQ.

    One soldier boy, a hourly truck driver collects sick time based on the average hours worked in a week for a year, which considers the average overtime, in his case was 48.25 hours per week. The soldier boy manager collected one 40 hour work week because there no record of hours worked for a manager and he smiles while he/she is doing it.

    The same is true of the vacation weeks paid on is based on the average hours worked and the exempt is based on a 5 day work week!

    EXEMPT has its advantages because they are paid for their brain power and leadership skills verses the strength of their back. I too wished I could get paid for the O/T worked, but at my preceived worth per hour for a 40 hour work week; however, I would not also want to risk the subjective bonus paid to exempt ees based on my "good looks and my quick mind"!!! I would also not wish to give up my company car, communication radio, mobile telephone, and pager for an off setting O/T. These three items alone add value to my compensation package of an additional $10,000.00 per year.

    Now ya'll know why I advertise for you to eat MORE PORK, so I can bring the BACON home!

    I just love this world of HR and compensation benefits!!!

  • You say they 'are paid a regular salary every two weeks'. What is a 'regular salary' if not a 'guaranteed salary'? If it is not guaranteed, as defined in the FLSA, then how are you defining 'regular'? And if 'regular' has no meaning, what could its value be? If you have a regular, guaranteed salary, it is not legal to dock the employee if they do not work a certain number of hours.

    It is impossible and illegal to both pay people a guaranteed salary and dock their pay.
  • oh, no! Don, can you come here as a consultant and get us straightened out? I guess the 300 attorneys in this office don't know what they are doing!
  • REYSA: I am sure your 300 attorneys are absolutely correct and most likely a set of very intimidating group to face a "wage and hour messenger". I would doubt that anyone of your 300 attorneys would be considered anything less than the professionals they are; thus EXEMPT from the FLSA which is the subject of this thread. Now your paralegals, ASSISTANTS, SECRETARIES, RUNNERS, ETC. begin to touch on the gray area of the FLSA and are in the group of personalities that have from time to time been used and abused by the very set of ATTORNEYS, DOCTORS, AND OTHER PROFESSIONAL, INCLUDING SELLS THAT CAUSE ALL OF THIS CONFUSION OVER THE FLSA, THAT YOU APPARENTLY WOULD NOT CONSIDER THEY MAY OR MAY NOT KNOW WHAT THEY ARE DOING in this area of interest!

  • On the contrary. I'm sure they know exactly what they are doing and have decided to go right ahead and do it, regardless of the law. Attorneys are like that, aren't they? If a wage and hour investigation team hits the door, however, those same attorneys will be pointing fingers and dancing the 'who me? jig' faster than you can pop their suspenders or order them a deli-lunch. x:-)
  • Reysa: Are you in MO or MS, your profile is not avaiable to us? If you are in Mississippi maybe Dandy Don and I will come to assist you in straigntening out these fascinating human beings. I

    take pride in the fact that my first un-employment hearing with my present company was opposing an X-ee who hired an attorney in our state, who now sits on the State of Mississippi Supreme Court. I single handedly whipped him in the hearing, I had the facts and he had the ees lies and his shield; it was the first time the company had ever attempted to fight an un-employment benefit when there was an attorney sitting on the other side. They don't know everything, but they make everyone believe they do just because they have a professional shield to hang.

    Enough on this thread and I'm out of here, it is MID DAY FRIDAY the babies are on the floor and I here the fish calling from the deer camp lake!!!

  • We also have salaried non-exempt classification and have had it for years. They are eligible for overtime and paid for hours worked (so we can dock if they don't have PTO and need to take time off). My understanding is that it reflects a group of employees who are non-exempt and typically or regularly work 40 hours/week - all we track are deviations from this workweek. I've contacted two DOL auditors and they agree this is fine, and I believe it's stated as such in the regs, but would need to do more searching to find it.
  • It's just a payroll practice, not too common but does exist. There is the salary and then there is the adjustment, up or down, depending on hours worked. If it is explained that it works both ways and reminded occasionally, it will work.
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