Exempt employee MUST be salaried?

Trish

I read in a payroll bulletin that to avoid any problems, exempt employees should never be paid hourly. Is that correct?

Down_the_Middle

I think it depends on what you mean by "paid hourly". Many older payroll systems require exempt staff to be recorded on an hourly basis, even though they do not clock-in or clock-out. The key to having someone exempt (from a compensation standpoint) is that they are paid on a salary or fee basis----------they get the same earnings each week without regard to how many hours they work. In addition the exempt person must satisfy the FLSA requirements of administrative, executive or professional......but that doesn't appear to be your real question.

RGB

The simple answer is no. An exempt employee does not have to be salaried. Paying an employee a salary versus an hourly wage and whether or not they are exempt are two distinct issues. Exempt versus non-exempt relates to whether or not the employee is eligible for overtime. You can ceratinly pay an employee hourly, and if they meet the guidelines for non-exempt status, then you do not have to pay them an overtime rate but simply pay them the regular rate for all hours worked (even if they physically work over forty hours a week). If the employee falls under the non-exempt guidelines, then you must pay them at overtime rates for any hours physically worked over the 40 hour guideline (or whatever your state laws dictate).

The employee is classified as exempt or non-exempt based on several criteria. These criteria should be available in numerous sources (on the web or in any number of employee manuals).

Don Avery

[font size="1" color="#FF0000"]LAST EDITED ON 08-15-01 AT 10:26PM (CST)[/font][p]With all due respect, I have to strongly disagree. An employee does not have to qualify for Exempt status in order to be salaried, but in order to be legitimately classified as Exempt, they must be salaried. If an employee's pay varies in direct proportion to the hours worked they do not meet one of the requirements for Exempt classification.
The answer to the original question is definately Yes. In order to be legitimately classified as Exempt, the employee must be salaried.