Red Hot Thoughts

Salary Compensation for non-exempt Employees

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While in a meeting last week, our client brought up a question regarding salary compensation for one of his non-exempt positions.  He had originally hired an employee to work for him on a temporary, trial basis so he could determine whether or not the individual was capable of performing the job.  While the individual was classified as a temporary employee, our client paid her $11.00 per hour.  He eventually decided that the individual was capable of performing the functions of the position and offered her a permanent position, which pays a monthly salary of $2,000.  However, our client stated that by definition, the position is a non-exempt (paid hourly) position.

Several weeks ago, on a Wednesday afternoon, the employee left work early in the afternoon.  It was the first of the month, and there was a lot of work she had not yet completed for the monthly reports that were due on the second.  She also did not show up to work the following Thursday and, although she claims to have called in to report her absence, our client was unable to find any record proving that she did.

While the employee was out of the office on Thursday, our client had to access her email inbox as he needed some valuable information for a project he was working on.  While viewing her email inbox, he found some valuable information he wasn’t even looking for.  He learned that the employee had been applying for other jobs, using company equipment and time to do so.

When she came to work on Friday, our client terminated her employment.  The employee was paid for the 6 hours she worked on the 1st in addition to her time worked between the 15th and 31st of the previous month.  Upon arriving home, the employee called our client stating that she should be paid for the entire first pay period of the current month since she was a salaried employee and not just the 6 hours she actually worked on the 1st.

Our client was not sure how to respond and asked for our clarification on what payment the employee truly was entitled to as a non-exempt, salaried employee.

Under federal law, when it comes to paying a non-exempt employee, employers must ensure that the employee is paid for all time worked, including time and one-half for all hours worked over 40 in a workweek, regardless of whether the employee is paid a salary or an hourly wage rate.

In this case, if our client had not been paying the employee overtime on all hours worked over 40 in a workweek, he may have inadvertently made her an exempt employee.  This is why we always caution our clients to pay non-exempt employees on an hourly basis instead of on a salary basis.

The law does not require employers to pay any non-exempt employee for time that he/she did not work. However, if the employee is exempt, she should be paid for a full 8 hours on the 1st instead of just the 6).  While our client had not been specifically tracking the employee’s hours worked per week, he was certain she has never been entitled to overtime as she worked approximately 6 hours per day, 5 days per week.

Our client confirmed that the terminated employee was indeed paid for all hours she worked, specifically the 6 hours that she worked on the 1st.  So, unless the employee had any accrued but unused paid time off for which she should have been paid for or if she is in fact exempt, we told our client that he does not owe the terminated employee any additional funds.

We also suggested before a replacement is hired, the position be moved to hourly pay and not salaried so there would be no confusion about the non-exempt status of the job.

 

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This entry was posted on Wednesday, October 1st, 2014 at 9:38 am and is filed under Advice, Employees, Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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