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Wednesday, January 21, 2009

Exempt Time Wrangling

Is it possible (i.e. legal) for an employer to define some exempt employees as 40-hour per week exempt employees, some as 35-hour per week employees, some as 32-hour employees, etc. when all were originally hired for 40-hour per week exempt positions? This particular employer routinely reduces a 40-hour employee’s hours (as well as salary) if the work load for that employee decreases either temporarily or permanently. The employer does this at will and then often drags their feet in restoring the 40-hour status when the work load increases. All these employees are doing the same type job, have the same credentials and qualifications. Workload for this position is regulated by state law.

First of all, it's time for my standard disclaimer: I am not a lawyer. I do not profess to be a lawyer, and I do not give any legal advice.

It's perfectly legal to have exempt jobs at less than 40 hours a week. But, I think what your boss is doing is illegal. One of the criteria to be exempt is that the employee must be paid the same amount, regardless of the number of hours worked. If he were evaluating jobs and adjusting pay (note, not hours, because technically you don't pay exempt people by the hour, although you can require that they work specific hours), once a year I might buy it. What he's doing is trying to have his cake and eat it too.

There's nothing wrong with paying someone by the hour, even if their responsibilities would make them exempt. The key is, though, if you choose to pay them by the hour you give up the exempt status and if they work 41 hours, they get overtime pay. (There are some exceptions to this in IT, I believe, but we'll assume this is not that situation.) What you can't do is pay less when they work less than 40, but not more when they work more than 40.

So, my advice is to contact your state Department of Labor. I don't know what your job is that is regulated by the state anyway, but methinks it's time for an unpleasant audit.

Of course, if you are feeling compassionate, you could warn the boss that you believe his actions are illegal. I suspect he knows that already, and no telling the fall out you'd get.

It really bugs me when people attempt to treat their employees like dirt and then wonder why they have low morale and high turnover (which I bet you have!).

5 comments:

Angela said...

And as it's an employer's market, they're getting away with it.

http://thrownintotraining.wordpress.com

Anonymous said...

But it won't always be an employer's market, and if they want to have any decent staff left when the tide turns, they'd better fix that problem ASAP.

Evil HR Dictator said...

http://www.dol.gov/dol/allcfr/ESA/Title_29/Part_541/29CFR541.602.htm

29 CFR 541.602:

Subject to the exceptions provided in paragraph (b) of this section, an
exempt employee must receive the full salary for any week in which the
employee performs any work without regard to the number of days or
hours worked. Exempt employees need not be paid for any workweek in
which they perform no work. An employee is not paid on a salary basis
if deductions from the employee's predetermined compensation are made
for absences occasioned by the employer or by the operating
requirements of the business. If the employee is ready, willing and
able to work, deductions may not be made for time when work is not
available.
(b) Exceptions. The prohibition against deductions from pay in the
salary basis requirement is subject to the following exceptions:
(1) Deductions from pay may be made when an exempt employee is
absent from work for one or more full days for personal reasons, other
than sickness or disability. Thus, if an employee is absent for two
full days to handle personal affairs, the employee's salaried status
will not be affected if deductions are made from the salary for two
full-day absences. However, if an exempt employee is absent for one and
a half days for personal reasons, the employer can deduct only for the
one full-day absence.
(2) Deductions from pay may be made for absences of one or more
full days occasioned by sickness or disability (including work-related
accidents) if the deduction is made in accordance with a bona fide
plan, policy or practice of providing compensation for loss of salary
occasioned by such sickness or disability. The employer is not required
to pay any portion of the employee's salary for full-day absences for
which the employee receives compensation under the plan, policy or
practice. Deductions for such full-day absences also may be made before
the employee has qualified under the plan, policy or practice, and
after the employee has exhausted the leave allowance thereunder. Thus,
for example, if an employer maintains a short-term disability insurance
plan providing salary replacement for 12 weeks starting on the fourth
day of absence, the employer may make deductions from pay for the three
days of absence before the employee qualifies for benefits under the
plan; for the twelve weeks in which the employee receives salary
replacement benefits under the plan; and for absences after the
employee has exhausted the 12 weeks of salary replacement benefits.
Similarly, an employer may make deductions from pay for absences of one
or more full days if salary replacement benefits are provided under a
State disability insurance law or under a State workers' compensation
law.
(3) While an employer cannot make deductions from pay for absences
of an exempt employee occasioned by jury duty, attendance as a witness
or temporary military leave, the employer can offset any amounts
received by an employee as jury fees, witness fees or military pay for
a particular week against the salary due for that particular week
without loss of the exemption.
(4) Deductions from pay of exempt employees may be made for
penalties imposed in good faith for infractions of safety rules of
major significance. Safety rules of major significance include those
relating to the prevention of serious danger in the workplace or to
other employees, such as rules prohibiting smoking in explosive plants,
oil refineries and coal mines.
(5) Deductions from pay of exempt employees may be made for unpaid
disciplinary suspensions of one or more full days imposed in good faith
for infractions of workplace conduct rules. Such suspensions must be
imposed pursuant to a written policy applicable to all employees. Thus,
for example, an employer may suspend an exempt employee without pay for
three days for violating a generally applicable written policy
prohibiting sexual harassment. Similarly, an employer may suspend an
exempt employee without pay for twelve days for violating a generally
applicable written policy prohibiting workplace violence.
(6) An employer is not required to pay the full salary in the
initial or terminal week of employment. Rather, an employer may pay a
proportionate part of an employee's full salary for the time actually
worked in the first and last week of employment. In such weeks, the
payment of an hourly or daily equivalent of the employee's full salary
for the time actually worked will meet the requirement. However,
employees are not paid on a salary basis within the meaning of these
regulations if they are employed occasionally for a few days, and the
employer pays them a proportionate part of the weekly salary when so
employed.
(7) An employer is not required to pay the full salary for weeks in
which an exempt employee takes unpaid leave under the Family and
Medical Leave Act. Rather, when an exempt employee takes unpaid leave
under the Family and Medical Leave Act, an employer may pay a
proportionate part of the full salary for time actually worked. For
example, if an employee who normally works 40 hours per week uses four
hours of unpaid leave under the Family and Medical Leave Act, the
employer could deduct 10 percent of the employee's normal salary that
week.
(c) When calculating the amount of a deduction from pay allowed
under paragraph (b) of this section, the employer may use the hourly or
daily equivalent of the employee's full weekly salary or any other
amount proportional to the time actually missed by the employee. A
deduction from pay as a penalty for violations of major safety rules
under paragraph (b)(4) of this section may be made in any amount.

Infamous HR Guy said...

Whoa.....

Come to California. That employer would pay some hefty fines.

Anonymous said...

This thread brings up a question I have--I work for a company that is known for working its employees to death. While I haven't worked any OT to speak of, I can see it on the horizon. I'd like to go part-time, but I don't want to get paid for 30 hours a week if I'm going to be working 40 (I'm salaried). Are there any ways around this besides finding another job?