Calling Hatchetman - Exempt Part-time

[font size="1" color="#FF0000"]LAST EDITED ON 03-11-04 AT 01:56PM (CST)[/font][br][br]Hatchetman,
You have mentioned in other posts, that in CA some exempt positions (doctors, lawyers, etc) can be classified as exempt and be paid hourly. Where can I find the reg on this? It's not covered in the wage order.

My current problem is with part-time exempt employees and how we pay them if they don't work regular hours. They want to be fair to the company and if they work fewer hours, charge fewer hours, but their exempt status won't let them do that (unfortunately our timesheet system does and we don't always catch it). We also have a lot of employees in the project environment, where they charge their time to a client, and of course, we have issues with employees charging a client for time they didn't work. We have very limited overhead budgets for them to charge non-working time to. This has been an ongoing problem.

Our system has not allowed us to classify what is an exempt level position as non-exempt (the position is tied to the exempt status). Our comp group is working on changes in the system to allow part-time non-exempt for a traditionally exempt level position so we can pay them for the hours they actually work. I thought this would jeopardize the exempt status of that position, but was told it would not. This is a major (expensive) system change and I want to make sure this is okay to do, legally.

Any advice?


  • 8 Comments sorted by Votes Date Added
  • Hatchetman always has the best answers on wage and hour stuff, but I'll take a stab at it. I doubt that an employee doctor, lawyer etc can be paid by the hour and retain exempt status when the employer is covered by the Wage Orders - not sure about the public sector. Maybe Hatchetman was referencing some sort of non-employee arrangement. You appear to be tracking by the hour because of project work which is then billed to the customer. This is OK but different from payroll and shouldn't be used to track hours for payroll purposes. In the absence of Hatchetman, I recommend contacting a labor attorney who specializes in compensation before making any changes.
  • Gillian - what's your opinion on re-classifying an exempt person as non-exempt if the duties aren't changing? We want to do this so we can pay part-time exempt people for the actual hours that they work, rather than some pro-rated salary based on what we think they're going to work when we set their part-time schedule. Obviously because they're part-time, they most likely won't be working any overtime, but if they do, they would be paid OT.

    It was our employment attorney who said it was okay to do this, but several of us in HR are thinking that would jeopardize the exempt status of anyone else in the same job classification.
  • I think that you need a second legal opinion. Whether a job is exempt or non-exempt is a matter of what the duties are and if they aren't changing I can't see how exempt becomes non-exempt. Maybe you got bum legal advice.
  • [font size="1" color="#FF0000"]LAST EDITED ON 03-12-04 AT 02:43PM (CST)[/font][br][br][font size="1" color="#FF0000"]LAST EDITED ON 03-12-04 AT 02:38 PM (CST)[/font]

    It's not in California alone.

    FLSA itself provides that doctors, lawyers and licensed school teachers who practice in those fields do not have to be salaried to be exempt.
    Thus thye may be paid hourly. This means thaey can have hours missed docked from their pay and not receive FLSA overtime if they work more than 40 horus in a work week (they could be paid a straight rate).

    Take a look at the Code of Federal Regulatons, volume 29, Section 541.314.


    We hire psychiatrists on an hourly basis and just pay straight rate and dock pay when they miss work (or they don't use thier accrued time benefits).

    FLSA both the speciic legislation and the regulaitons establish other specific jobs as payble as exempt but not required to be salaried, e.g., domestic servants.

    But I don't think that is your problem here.

    With the formal DOL Opinons and the State Laobr Commssioner's Opnions on state wage and hour law sometimes differing, your best bet, through your legal counsel, is to pose the question to the Labor Commission's Division of Labor Standard Enforcement (the State's Wage and Hour people). It can be done on line through e-mail at the Department of Industrial Relations website...look under Labor Law.

    Or you can search through the DLSE Enforcemnt Manual which is also there. But you may find it cumbersome to use.
  • Glad you showed up. Based on what Hatchetman says I would make sure that the exempt positions under consideration for change meet the same standards that make the doctor, lawyers etc. exempt and hourly at the same time. I bet they don't.
  • Hatchetman (and others) thought we reached agreement on this issue a couple of weeks ago, but now I'm confused again (surprise, surprise). Are we confusing 'exempt' with theinability to pay hourly if desired? Couldn't I, if I wanted, pay the physician ceo of a multinational by the hour if I wanted? All 341 says is that the prof is 'excepted from the salary requirement'. So, can I pay straight time for 50 hours w/o worry of vio of FLSA? For some reason I'm having dificulty reducing this issue to a practical answer. Thanks!
  • I think where you can't "pay by the hour" if you pay for less than 40 hours (unless they are in category Hatchetman mentioned, doctors, lawyers, etc.). If you dock an exempt employee's pay based on the hours they worked, you'll be in trouble. But you can pay them overtime if you want to.

    Maybe Hatchetman can clarify.
  • [font size="1" color="#FF0000"]LAST EDITED ON 03-15-04 AT 02:04PM (CST)[/font][br][br]An employer may deem any properly qualified exempt job as non-exmept and pay hourly with time and a half.

    FLSA requires most exempt positions to be salaired and only permits docking of the salary in specifically identifed situations (541.118a).

    FLSA does identify some jobs that may be exempt and still be paid hourly without jeopardizing the exempt status -- doctors, teachers, domestic servants, "computer professionals" and other specially designated jobs -- when those jobs meet the requirements for exemption set in the relevant FLSA regulation. However, FLSA regulations specifically provide that licensed doctors, licensed lawyers and licensed school teachers must be practicing in their disicpline in order to have the salary requirement for exemption "waived." A CEO who happens to be physician doesn't meet that requirement for waiver (I don't think managing a corporation is working in the medical doctor discipline).

    Or the employer still may pay them as exempt salaried, or like above, non-exempt hourly. If they are paid as exmept, salaried the the restrictions on docking in 541.118(a) apply. Now I'm not sure that applies in all the special categories, such as for domestic servants because they won't fall under the traditional "white collar exemptions"

    If they are paid as "hourly exempt" then the employer can just pay straight rate time for all time worked without violating FLSA.

    DOL interpets 541.118(b) to allow the employer to pay extra compensation, even on an hourly basis to salaried, exempts, for their effort and time that go beyond what their salary is intended to cover without jeopardizing the exempt status.

    An employer may have a part time exempt salaried position. The salary pay may be pro-rated but the salary requirements (and job duties requirement) of the particular exemption category still must be met (they may not be pro-rated). In California, that means an amount equal to twice the hourly minimum wage rate for 40 hours of work (even if the employee is only working 10). If the salary requirement isn't met, then the particular position may not be exempt but must be paid hourly as a non-exempt. In this situation, the non-exempt status would not impact the other positions in the job that are exempt (because they do meet the exemption criteria).

    It is my undrstanding based upon what I have read that it would be improper for an employer to REDUCE the SALARY of an exempt employee because work demands don't require the employee to work as much (less hours). Remember the provisions of 541.118 about paying the employee the regular salary for any work week in which he or she works any part except for the allowed docking -- which lack of work isn't one.

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