Do your salaried employees meet the minimum salary requirements to be exempt from overtime pay? The Fair Labor Standards Act (FLSA) salary requirement for most of the overtime exemptions sets a floor at $455/week. This is the amount a person has to be paid for their salary to meet the overtime exemption. Some state laws have higher salary requirements (e.g., California has a floor of $33,280/year, which is tied to the state minimum wage in the calculation). You need to be sure that the employee is paid at least the amount required by both federal and state law. If the employee is paid less than the floor level, then they automatically are non-exempt, regardless of whether they meet all of the duties requirements for overtime exemption.
In a BLR webinar titled "Advanced Exemption Audits: Evaluate Your Overtime Classifications Now To Avoid Costly Trouble Later," Mary Topliff, Esq., outlined the issue of minimum salary requirements, and she also covered some tips on inadvertent deductions that could make employees lose their overtime exemption status.
Salaried employees also must meet other requirements to qualify as overtime exempt. For example, their pay cannot be deducted in partial day increments (with limited exceptions). Here are some tips on avoiding inadvertent deductions, to avoid a situation where your overtime exempt employees lose their exempt status:
- Have policy for employees to raise paycheck issues, so that employees can review their paycheck and advise any issue immediately.
- Address and fix any issues quickly, looking at the specific employee issue and also looking at the broader implications or changes that might be required).
- Get employee acknowledgment that the issue was resolved, to avoid the potential of a problem later.
- Have a payroll auditing system to ensure there are no partial-day payments for exempt employees.
Mary Topliff, Esq. founded the Law Offices of Mary L. Topliff in San Francisco in 1997, after practicing civil and employment litigation for nine years. ( www.joblaw.com) The firm specializes in employment law counseling, training, and compliance, focusing on practical solutions to avoid costly legal issues. She has advised many organizations regarding overtime exemption analyses and strategies for minimizing the risk. Topliff is a published author and frequent speaker on legal issues impacting the workplace.