Overtime Stipend for Exempt Employees

Ruskanen · December 2001

We have a stipend for Exempt Supervisors in our manufacturing plant. It states, "Because certain salaried employees at times must work many hours to keep up with business, we will compensate plant plant Supervisors for hours over 40 in a workweek." They are paid what their salary breaks down to for an hour, for every hour over 40. Does anyone know of potential problems with paying salaried employees an overtime stipend? Does anyone else have a way to compensate supervisors who typically work 50 hours a week to keep up with production demands?

Cathie · December 2001

Although there is nothing illegal in what you are doing, if one of these employees ever were to file a complaint with the DOL over what they perceived as FLSA violations, the fact that you compensated overtime on an hour for hour basis might serve to put them over the line and make them non-exempt.

A previous employer of mine would pay a flat bonus rate for any hours over 48 in a week - i.e. if they worked 46 hours they didn't get any additional compensation, but if they worked 50 they got a flat-rate bonus.

Gillian · December 2001

Your plan should also tie into some sort of rationale rather than just working a bunch of hours. Can your tie it into projects, deadlines etc. to keep away from being based on merely hours worked? What you are doing is common in some industries because to do otherwise means that employees make more money than the supervisors.

Margaret Morford · December 2001

I do not believe that you run the risk of losing the exemption if you pay more than is required. You might want to modify your policy to pay straight time for hours worked in excess of 45 to keep from paying for casual overtime.

Margaret Morford
theHRedge
615-371-8200
[email]mmorford@mleesmith.com[/email]
[url]http://www.thehredge.net[/url]

Carol CA · December 2001

I also work in a manufacturing plant where sometimes plant superviors have to work a lot of hours. Our policy is that they must work at least 4 hours in a day overtime in order to be eligible for any extra pay at straight time (not time and a half). So if they work 4 hours over to help cover the next shift or come in and work over 4 hours on a Saturday, they get paid straight time for those hours. Working an extra hour or two in a day is expected of exempts, thus they receive no additional compensation for "casual" overtime.

casals · December 2001

Your practice undermines the nature of an exempt employee. It is assumed exempt employees will occasionally work in excess of 40 hours without addtional compensation. This extra effort over an annual period should be built into the compensation for the position and not paid during a particular season. Th eother side of the coin is that when an exempt employee needs to take part of a day off for personal business or whatever, you shouldn't be docking them.

felicia_matthews · January 2002

I just posted a similar question in the Wage and Hour Forum. And I have called around to some fellow communities to take an informal survey of what they are doing as well. Your best bet would be to give these supervisors a second job and then pay them a flat rate for this time worked. We have RNs supervisors who sometimes have to work a nursing shift because of call-ins, etc and we pay them for this shift. We have made sure that they are not doing any of their regular job functions when they are working a nursing shift. This could help avoid the misconception that they should have been non-exempt all along. I think it gets trickier when you are paying an exempt supervisor extra for performing essentially the same functions...And for us in CA, the exempt vs. non-exempt standard is even higher than FLSA...

Overtime Stipend for Exempt Employees

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