Exempt overtime

M Warner

My company has a policy to pay exempt employees who make less than $40,000 overtime. Is this customary and what are the legal ramifications? I feel this is being abused by some employees who dally during the week and come in on Saturdays. On the other hand, it has helped several middle managers whose jobs require more that 40 hours, make ends meet.
What are the laws and guidelines for this practice?

Down_the_Middle

No offense, but that policy is goofy! Aside from the fact that the $40K is arbitrary, paying ANY exempt person additional hours is only not required, but makes those positions non-exempt for all hours worked. There is a 2 yr statute "look back" for FLSA violations and I would shudder to think of the impact to your organization for continuing this practice. Do a search on this site for "exempt" and you'll find more than enuff info to reassure you that your current practice is very risky. Good luck with changing this pay practice.

System

I think what you're doing is technically OK under the law. But it's a legal risk and seems counter-productive.

James Sokolowski
Senior Editor
M. Lee Smith Publishers

inhousecounsel

I just read an article which said: "Additional compensation over and above "the predetermined amount" may be paid without destroying the employee's salaried exempt status, even if that compensation comes in the form of pay at an hourly rate for each hour above the employee's regular schedule." The writer referred to -- 29 CFR 541.118(b); Rutlin v. Prime Succession, Inc., 29 F.Supp.2d 794 (W.D. Mich. 1998);Demos v. City of Indianapolis, 126 F.Supp.2d 548 (S.D. Ind. 2000). You may want to check out these citations to see if they help you.

Gillian

It is probably OK from a legal perspective, however, it is not be a good policy. Overtime for supervisors is a common practice in some industries. When paid, it is in recognition of the work that is put in plus the fact that if not paid, the workers make more money that the supervisors - a bummer for supervisor morale. The overtime is sometimes called a bonus, sometimes overtime at a different rate (often straight time) and is usually temporary or tied in to some sort of production deadline.