1. Can an employer avoid paying overtime to employees because of their job titles or the fact that they get paid a “salary” (the same amount every week)?
2. Can an employer allow non-exempt employees (employees to whom the wage/hour laws apply) to accrue and use “comp time” (in lieu of overtime) between pay periods?
3. Can an employer pay a fluctuating amount to an exempt employee?
4. Can an employer dock exempt employees for less than a day’s absence?
5. Can an employer pay exempt employees for extra hours worked?
6. Must an employer count nondiscretionary bonuses (where the bonus or its amount is promised) in base wages for the calculation of overtime pay?
7. If an employer’s smallest pay increment is 1/4 hour, can an employer dock a non-exempt employee who is less than 7.5 minutes late?
Answers:
1. Not necessarily. To be exempt, employees must fit within one of the FLSA exemptions. The most common exemptions are executive, administrative, professional and outside salesperson. The trickiest one of these is the administrative exemption. To be administrative, the employee must regularly exercise discretion and control in the performance of his/her job. Employers need to audit their positions. The best way to start this process is by writing accurate job descriptions and reviewing them to determine eligibility for exempt status. When in doubt, the safest course is to treat the employee as non-exempt.
2. No. If an exempt employee works overtime in a pay period, he/she must be paid for that overtime at 1 times his/her regular rate. The time cannot be carried forward or backward to another pay period. Congress has yet to change this.
3. No. One of the tests of exempt employees is that they must receive a salary, a fixed amount every pay period.
4. No. As above, exempt employees must receive a fixed salary amount, so they cannot be docked for less than a day’s absence.
5. No, again because of the fixed amount requirement. An employer cannot pay an exempt employee based on hours worked. A bonus not tied to hours worked is acceptable, however.
6. Yes. A bonus that is defined or can be predetermined must be included in an overtime pay calculation.
7. No. If an employer’s smallest pay increment is 1/4 hour, it may only dock a non-exempt employee who is 7.5 or more minutes late. One solution is to establish smaller pay increments (i.e. 1/10 of hour.)
We hope this quiz has been helpful. Contact us if you have any question in this sometimes tricky area.