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Saturday, November 16, 2013

Clocking exempt employees

The Fair Labor Standards Act details minimum salary amounts
Employee exemption is determined by the Fair Labor Standards Act
By Roger Helms

Can exempt employees’ hours be tracked without risking their exempt standing? Though employers are not mandated to track the time of an exempt employee, there is no law prohibiting them from doing so. According to labor laws dealing with overtime, employees whose jobs are governed by the FLSA, Fair Labor Standards Act, are either “exempt” or “nonexempt.” Nonexempt employees are eligible for overtime pay. Exempt employees are not. Most employees covered by the FLSA are nonexempt others are not. For example outside sales staff are exempt, inside sales staff are nonexempt.

Advantages and disadvantages of tracking exempt time

There are advantages and disadvantages to obliging employees to track their time. Sensitivity may erupt when exempt employees are required to track and report hours worked. An employee’s discretion and independence may come into question as far as being exempt is concerned. This is an issue the DOL, Department of Labor, or court may deliberate in a close case.


• A particular category of employees may feel humiliated
• If an employee is really working a substantial amount of hours, misclassification of the employee could cause problems later on


• Following and comparing productivity is improved, skill, and attendance amongst exempt employees
• It validates the number of hours an employee is working lest there is a concern that you have classified him/her improperly.

Can additional payments be made?

To comply with the FLSA’s minimum salary regulations, an employer must pay staff a minimum of $455 each week, without fail. Supplying additional repayment for commissions or overtime pay does not signify that employees are not compensated on a salary basis, as long as those things are not incorporated in determining if they meet the minimum salary essentials. Neither can, lodging, board, and additional options be included in your estimate of whether an employee meets the minimum wage requirement.

Moreover, supplying recompense in addition to an employee’s regular salary does not change their exempt status, whether that payment is for an hourly rate for every hour over the employees’ normal schedule. Basically, you can incorporate these and other kinds of “bonuses” to exempt employees; however, you are not allowed to mix them into your calculation of their salary to rate them as exempt.

For instance, Carson & Carson is a law firm with offices in downtown Chicago, Illinois. Employees receive paid parking and bus passes for those who do not drive to the office. Monthly cost is $45 for both. The firm has an agreement with the garage in their building to pay directly for the employee’s parking expenditures. The law firm also buys bus passes for employees on a monthly basis.

The firm has a few staff members who could qualify for the administrative exemption but their weekly salary is just $435. The office supervisor decides to enter the amount of the parking and/or bus passes in the calculation of those employees smallest salaries. Because that increased their salaries to over $23,660, she re-categorized them as exempt and notified them that they were no longer allowed overtime pay. This is a violation of FLSA’s labor laws for overtime salary base requirements. To meet the terms of the FLSA, the office supervisor could have paid the employees an extra $45 each month. This would have accomplished the desired outcome without violating the FLSA rules.   

About the author: Roger Helms is a expert in many aspects of the business world and really enjoys sharing his knowledge. He has contributed to many different websites all across the world.

Image license: Ervin Bacik, RGBStock royalty free

1 comment:

  1. This post just read our minds and by reading the points, some had or will occur in a quantity of staff.