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Overtime pay for exempt employees
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Overtime pay for exempt employees
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What are the parameters for paying additional hours to exempt staff, in addition to their regular salary? I recently read that it is we would not be risking their exempt status as long as we are payin
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Forums » Topic Forums » Legal Forum » Overtime pay for exempt employees
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Overtime pay for exempt employees
posted at 5/19/2009 8:05 AM EDT
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Posts: 2
First: 5/19/2009 Last: 5/19/2009 |
What are the parameters for paying additional hours to exempt staff, in addition to their regular salary? I recently read that it is we would not be risking their exempt status as long as we are paying no less than their regular salary. Is this true? If so, would we have to pay time and a half over 40 hours as we do for non-exempt? |
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Overtime pay for exempt employees
posted at 5/19/2009 8:43 AM EDT
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Posts: 1103
First: 3/16/2007 Last: 8/19/2011 |
29 C.F.R. 541.118( provides that "additional compensation besides the salary is not inconsistent with the salary basis of payment". DOL's Field Operations Handbook, Section 22b01, states that[b] "Extra compensation may be paid for OT to an exempt employee on any basis. The OT payment need not be at time and one-half, but may be at straight time, or flat sum, or on any other basis."
and DOL states that as long as exempt employees receive a guaranteed salary free and clear of any reductions on the basis of quality or quantity of time worked, extra pay or extra leave time for extra work is permissible. [b]29 C.F.R. 541.118 ( provides that "additional compensation besides the salary is not inconsistent with the salary basis of payment". DOL's Field Operations Handbook, Section 22b01, states that "Extra compensation may be paid for OT to an exempt employee on any basis. The OT payment need not be at time and one-half, but may be at straight time, or flat sum, or on any other basis." In other words, an employer is allowed to pay exempt employees who work over a stated minimum number of hours (45, 50, or whatever) in a week will receive extra pay or compensatory time on a straight-time basis for each additional hour.[/b] Some companies that have a difficult time attracting and keeping qualified employees find that they must offer additional pay like that as an incentive to join and stay with the company. |
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Overtime pay for exempt employees
posted at 5/19/2009 8:50 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Agree with HRPro. Definitely legal.
But I still wouldn't tend to do it on an hour by hour basis, but instead on a special case basis. Otherwise, you might be setting the precedent/expecation that if they work over x hours they deserve extra pay. And when and if you cut the benefit later, it feels like much greater of a loss in pay. What the consulting firm that I worked for years ago did was to figure those extra hours into the calculation for a yearly bonus and promotions. It made the "thank you" recognition much larger and wasn't paid out to those employees who left before the calculation of the bonus which seemed to help with retention especially through critical times in the year. |
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Overtime pay for exempt employees
posted at 5/19/2009 10:41 AM EDT
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Posts: 2
First: 5/19/2009 Last: 5/19/2009 |
Thank you both! It seems there this is a pretty gray area. In the past we have given bonuses as a way to compensate exempt staff for additional work. To be on the safe side, I think that is what we will continue to do. |
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Overtime pay for exempt employees
posted at 5/19/2009 11:28 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
If the overtime hours have become part of the "regular" routine then no additional compensation should be paid.
If the overtime hours are tied to a specific project or event then a completion bonus works perfectly. Exempt staff understand that the job takes as long as it takes to complete. Hours are not relevant unless they lead to burnout and then you have other staff issues to consider. |
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