Non-Exempt but Salaried???
CAHR
34 Posts
ok... need to get your views on this. Wondering if some of you do this... I never have. Just got out of a meeting where the President announced that he wants to have some of our hourly positions made salaried. They will still complete a timesheet and we will pay them overtime (it will just be a payroll nightmare as we will have to calculate the OT each time...)
He is adamant that the employee's will work so much better and morale will be better just being told that they are now going to be "salaried". Now this is not for all our positions - mostly our "working supervisors" and some high level office people. Thoughts ????? (I really do not want to do this, but need some ammunition to go back into the next meeting with!!) :-)
He is adamant that the employee's will work so much better and morale will be better just being told that they are now going to be "salaried". Now this is not for all our positions - mostly our "working supervisors" and some high level office people. Thoughts ????? (I really do not want to do this, but need some ammunition to go back into the next meeting with!!) :-)
Comments
At one time, we had what we called a guaranteed 40 hour week for our full-time employees. As long as they worked their full schedule, at least 38 hours, they were paid for 40 hours. Of course any over 40 was OVT. We have since discontinued this practice, except for a couple that were grandfathered...
Good luck...
(and... IF they work over 8/day they would get overtime.)
Our boss instigated salaried nonexempt after a DOL auditor said he could. It is not a luxury nor does it lend any status. The employee only gets additional HALF time for overtime because their "salary" covers the "regular" portion of any hours worked over 40. Unless they work the exact same hours every week, they have a different hourly rate every week that has to be computed to pay the half time. Since the half time is hardly worth it, most employees work efficiently to avoid it, and the company pays less for overtime.
Good luck, CAHR! If you are in CA I recommend that you check your state laws before you attempt sal/nonexempt.
So... we changed them to salaried non-exempt. For the employees, it was a "plus". They weren't getting overtime pay before, and now they are, albeit not very much. The bigger plus is during holiday weeks. If they work 38 hours over four days, for example, we still pay them holiday pay, plus the 38 regular hours.
There are other threads on this if you do a search. You can also find info on the DOL website - I researched it a few years ago.
Basically, when they work <40/week, they are paid their base weekly salary. When they work >40/week they are paid hourly with an adjusted horly rate, depending on total hours worked.
If so, he may consider the work and aggravation of a custom hourly rate each week to be well worth the returns of employee loyalty and enthusiasm. Further, are these employees that you are grooming for a further promotion? This is most important because if you just want to make them salaried and leave them where they are, they may well soon grow discontented and you will be worse off than if you left things alone. This is what I would tell my president. By making them salaried, you are sending a signal. In order for them to be happy over the long run, the signal must be true and you must be ready, willing, and able to advance them up the ladder.
We use ADP as our labor & timecard manager so calculating pay has never been a nightmare. Our accounting department never seemed to have any difficulty prior to our inception of ADP, either.
Some positives of your company making this change that your employees many enjoy (if you do it the way our company does) is that if the employee works 38 hours, they receive 40 hours pay. If they work over 40, they still receive OT.
BUT a negative to this setup is if they work more than 32 hours in a week which has a company paid holiday, like the 4th of July, they are paid only their normal amount of salary; that is, if your company decides to do this by the book, which our company did. This can be a difficult thing to explain to employees who figure that they can get their regular 32 hours PLUS holiday PLUS overtime pay for working less then 40 hours or even more regular hours of pay when working over thirty-two.
When I took over here, I spent a lot of time searching the BOLI websites and finally on the phone with the DOL. Now when I know a holiday is approaching, I always remind the staff to watch their hours.
Frankly, if your looking for ammunition to shoot this one down, this negative I’ve just described is the number one reason that I wish that we didn’t use this classification. It has embittered more employees than it has ever increased morale. If it weren’t for my calls to the DOL and the research time I’ve put in, I swear some of these employees would have walked out, claiming unfair work practices.
Good luck, I hope that you can change your president’s mind!
How do you handle if a salaried non-exempt works more than 40 in a 4 day week? Pay them 32 regular plus overtime but skip paying the hours between 32-40? We do run in to this sometimes.
For example; an employee works 42 hours during a holiday week, we pay;
40 straight
2 overtime (at the adjusted rate)
8 holiday
This isn't just an employee-friendly policy, it's how I interpreted the law.
If they'd worked 28 hours during the holiday week, we'd pay;
32 straight
8 holiday
Edit: forgot to mention: AZ follows federal laws - there are no separate state laws addressing this. Maybe there are in OR?
You've made an excellent point! With the agencies I contacted, I specifically mentioned that we are in Oregon so perhaps this doesn't affect CA. I had difficulty interpreting the law so that's why I called the DOL.
Examples of hours we'd pay are as follows:
If our employee worked 28 hours during the holiday week, we'd also pay;
32 straight
8 holiday
but
If our employee worked 42 during a holiday week, they would be paid
40 salaried hours
2 OT.
I think that we may have opened up a hot topic here and I've always wanted to discuss this with other members of the HR field (without hijacking this thread) but if the laws are being interpreted differently or if the DOL is giving out bad info, I'd certainly like to know!
We have (1) person on this system, because he has responsibility for a major and critical part of our business, yet he does significant physical work. We calculated the cost of a 50 hour work week including O/T. His hours of work depend on the need to be present for physical hard work during particular times of the day. He sets his own schedule and acts, accordingly. He has gotten very efficient at his job task and does not work the O/t hours, fully and that is ok!
Based on our written agreement he understands that his salary is based on his base rate for 40 hours and O/T rate for hours worked over 40 up to 10 hours. Regardless of the number of hours less than 50, he will be paid the agreed to salary, which includes the 10 hours of O/T whether he worked them or not. It is also his and our responsibility to pay him additional over time hours, if he works over the 50.
This allows us to pay him as a salaried person, yet understand that he is NON-EXEMPT.
I hope this will help you to research this particular compensation system which will accomplish what the boss wants!
Richard also know as PORK on this forum!