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Friday, July 31, 2009

Should you go exempt?

I am happily employed at a nonprofit as a non-exempt employee. Unfortunately, as is true at many NPO’s I do not get any sick pay, holiday pay or vacation pay. The option of becoming an exempt employee is now on the table, but I’m not sure it’s beneficial. Last year I grossed $20,000 working an erratic but flexible schedule at an hourly rate of $20 and an average of 20 hours weekly. If I become exempt without a pay increase, 20 hours a week at $20 hour gets me $20,800, so what is the benefit. Yes, technically I would get paid holidays and vacation, but I already didn’t work those days, and made the same amount of money. What are the pros and cons of becoming an exempt or salaried (are these even the same thing) employee? Is it standard to get a pay raise when becoming exempt?

Nothing is standard. You can ask if a pay raise comes along with the exempt status. Who knows? But, financially, the benefits are only there if you're going to be working fewer hours than you have (unless a pay raise is in the offering).

Exempt/non-exempt status is determined by the type of job you do--your responsibilities. I'll assume you meet the requirements for exempt status. There's nothing wrong with an employer taking someone who would qualify for an FLSA exempt status and paying you hourly. However, if the employer chooses to do this, he must treat you as an hourly employee, in that if you work more than 40 hours a week, you are eligible for overtime pay.

This doesn't seem like an issue in your case.

Lots of people want to be exempt because of the prestige of the whole thing. For some reason we've determined that having that exempt label makes you cooler, or something. In your case, it does have the added benefit of paid sick and vacation days. However, since you are working a flexible, part time schedule anyway, there isn't a lot to be said for that.

My advice in the end? Find out the details. Be wary that they are "offering" you this because they want you to work more hours, but not have to pay you. (Perfectly legal--an exempt employee is paid by the job, not the hour, so you get the same paycheck whether you put in 5 hours in a week, or 60.) Ask yourself where you want to go. In many organizations, exempt staff are treated differently than hourly staff. You may be taken more seriously. (Honest!) You may have doors opened up to you that would otherwise be closed.

But, that is dependent on your organization's culture. Don't disregard the importance of culture.

If none of that matters, stay paid hourly. That way if you work more, you get paid more. Assuming, of course, that you will get enough hours to meet your needs.


Olivia said...

Call my cynical, but I have to wonder about the company's motivation for doing this..EHRL is right - perhaps it is their way of making you work additional hours. The only other reason I could see for doing this would be some ease of administration.

Anonymous said...

"Assuming you meet the criteria for an exemption" is assuming alot. I agree with Olivia - this smells like an attempt to squeeze more hours out for the same amount of money.

class-factotum said...

Exempt = exempt from overtime.

Stay hourly.

OK-HR said...

If they are truly going to make you exempt, they have to give you a raise. One of the qualifications for being exempt is that you make a minimum of $455/wk which equals $23,660 annually. Now, if they are talking about just paying you a flat salary, that is a different issue and overtime would still be requred if you worked more than 40hrs in a week. I definitely think you need to sit down with them and get the details.