Exempt nightmare!!!!

Paula · November 2002

We have a few salaried, exempt employees who are on a year round reduced schedule. For example: Jane works 55 hours in spring, take the summer off, and work 40 hours a week the rest of the year. Because of our industry we have busier times of the year so we are able to accomodate this. Their schedules were pre-arranged where they said they would complete "x" number of billable hours in a year. These hours were then divided by the number of billable hours their peers work in a year in order to come up with a percentage (Ex: Jane works a 60% schedule in relation to her peers) Jane's annual salary was then multiplied by this 60% and paid equally over 24 pay periods. (Example: $50,000 x 60% = $30,000 - $30,000/24 pay periods = $1250.00 per pay period whether or not Jane was actually working at the time). As you can see there are some serious problems with this arrangment! The person that set up this system is no longer here and I'm trying to come up with a better arrangement so that we don't get to November and then find that Jane will not meet her billable hour goal, thus we are overpaying her. We want to still be able to accomodate those employees that want to have this reduced schedule, yet simplify it. We can't pay them on an hourly basis because they are exempt. Any suggestions on how others handle such a situation would be greatly appreciated!!

HR Beginner · November 2002

The way I understand "salaried-exempt" is that your wage is always the same no matter how many hours or days you work. I'm sure this answer is too simple.

Pork · November 2002

Your words give me "chills"; nighmares would be expected. First thing is make sure EXEMPT or NON-EXEMPT is truly properly use in classifying these positions. If they are truly EXEMPT and time keeping has a legal and business necessity for consideration and keeping record for "billing", then don't worry about the accounting actions devised to compensate these individuals, just do it. I would meet with the accounting person who dreamed up this scheme and "can it, file #13". I would figure out what their positions are worth and pay them. I would tell the manager to figure out another way of arranging their number of hours worked to accomplish their jobs by each pay period. Keeping time on EXEMPT EMPLOYEES is not wise, because you are getting very close to the need for wage and hour folks to come snoopping around to check if you are properly classifying positions or are you circumventing the right to collect O/T dollars and thus more income taxes for "Uncle Sam". Bend there and done that, it is no fun!!! Pork

Crout · November 2002

You need to tell us what Jane's job is. Is she a farm laborer, a salesperson, a truck driver, what?

Paula · November 2002

"Jane" is an accountant.

Alice1 · November 2002

I posted this under Computing Semi Monthly Payroll but maybe it fits here better

Do the terms exempt and non-exempt apply only to salaried personnel...I am an hourly employee and get overtime for anything over 40...I thought that made me a "non-exempt hourly employee"

Alice 1

NaeNae55 · November 2002

Alice1

Exempt: employees are exempt from overtime

Non-exempt (or hourly): employees receive overtime for all hours worked over 40 in one week

Salaried non-exempt: these employees receive a salary and are eligible for overtime. The overtime is computed a little differently

This is per federal laws. Some states go a bit further. For instance, in California anything over 8 hours is considered overtime.

Hope this helps

Hatchetman · November 2002

More accurately, exempt employees are exempt from the "minimum wage mandated by federal law" (assuming the exempt criteria is met) and the provisions of FLSA in providing time and a half for each hour worked in excess of 40 hours per week. Generally, and traditionally, "white collar" position in the managerial, administrative and professional ranks may be exempt. One of the criteria, under FLSA, is that the employee must be salaried (except for physicians, lawyers and school teachers who need not be salaried to be exempt amd thus can be paid by the hour, including straight-rate, hourly overtime; and computer specialists paid at least $27.63 per hour, who do computer systems design and/or systems analysis).

An employer is always free to pay overtime to exempt employees, inlcuding hourly overtime, under DOL interpetation as long as their salaries are not reduced unless specifically permitted by Section 541.118 of the Code of Federal Regulations, volume 29. Some courts have gone along with that interpretation (allowing overtime to exempts); others have not. And, of course, indivdiual state law may set different criteria that is more beneficial to the employee than the provisions in FLSA on this point. For example, in California, registered nurses working in clinics and hospitals are by law "non-exempt" even though they could be classified as exempt professionals. California also sets a higher hourly rate for the computer specialist exemption.

Alice1 · November 2002

Thanks for the definitions...very helpful..I've printed the info for my workbook.

Alice 1

Exempt nightmare!!!!

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