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Overtime for Exempt Employees?!?
Old 08-20-2008, 05:32 PM   #1
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Overtime for Exempt Employees?!?

I just returned from a great two day seminar on management. It was very helpful overall and the speaker was great in his area of expertise (management). He was lacking, however, in his knowledge of law as far as I can tell. For example, he didn't really have a good grasp on how malpractice claims are really just tort claims of negligence against professionals (among other criticisms I have). Another legal shortcoming was his understanding/explanation of duties of property owners to entrants and invitees. Obviously he wasn't holding himself out as a legal expert or attorney, but in our line of work, I'd like to think people would shut up if they don't know what they are talking about, particularly if the tuition is $1000+.

He brought up one particular point that I'm interested in. I have spent some time searching and I can't find any definitive answer one way or the other. The speaker's statement was to the effect that even exempt employees MUST be paid overtime if they are directed to work overtime by their employer. But it must be specifically directed and not something that the employee takes upon themselves.

For example, "Bob, come in Saturday and finish this project" equals overtime must be paid. In contrast, "Bob, I know it is Thursday afternoon and I'm asking you to do 20 hours of work to finish this project by Monday morning. I don't care how you complete the project, just make sure it is done by 8:00 am sharp on Monday" equals overtime does not have to be paid.

This seems like an arbitrary distinction to me, but the shocking thing was that employers would have to pay overtime to ANY exempt employees. I couldn't find anything in the Fair Labor Standards Act to require this. Any employment lawyers or HR execs have any clue here? Is it straight time or time and one half?

If this is true, I'm going to start engaging in the game of making my employer specifically require me to work overtime when necessary so that I can demand overtime pay!
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Old 08-20-2008, 05:54 PM   #2
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All I know is that I work as a scientist for the federal government, and none of the scientific/engineering employees at my agency ever get a penny of overtime. We get comp time instead. I am told that the reason for no overtime pay are that the agency has no budget for it.
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Old 08-20-2008, 06:03 PM   #3
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I think the payment of overtime is subject to state labor laws as well as federal labor laws. So YMMV depending on who you work for and where you live.

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Old 08-20-2008, 06:06 PM   #4
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I think the payment of overtime is subject to state labor laws as well as federal labor laws. So YMMV depending on who you work for and where you live.
I may have to look into this. The speaker I was referring to in the OP was based out of Georgia, but speaking in a midwestern state to an audience from all over the US.

I posted this here because it seems like a bizarre concept, but I'd like to take advantage of it if true.
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Old 08-20-2008, 06:16 PM   #5
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Possibly my agency might be getting around it by not having hard copy direct orders to work overtime. For example, in June I was stuck between a rock and a hard place with two tasks that were both on a "short fuse". One involved all day meetings of a small decision making group for a week with a firm deadline, and the other involved implementing certain recent urgent dictates of Congress. I asked for management to dictate my priorities between these two tasks, and was told verbally they were both absolutely necessary and neither could be omitted, speeded up, or delayed, both were top priority and that there was no way they could both be completed in the 40 available hours "but you could work extra and take comp time". All of that was verbal. Nothing was on paper except an approval form for the comp time.

My real choices were comp time or doing the work at home in the evenings, "under the table". No way was I going to do that, since I occasionally have weeks that are not too busy as well as more weeks that are. So, I waited about 6 weeks until I could see that I had a less busy week coming up, and took my comp time.
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Old 08-20-2008, 06:22 PM   #6
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I agree that the consultant's comments on paying overtime to Exempt employees is not the typical guideline. The use of the term "Exempt" is to classify these positions as ones NOT subject to state and federal overtime rules/laws. To be an Exempt employee you have to work in positions that are professional and/or are very self directed in terms of fulfilling the role and how you go about doing it. The position is either Emempt or Not. When the position is Exempt the rules do not change to fit an exceptional need. Here is a link from Monster with an overview http://career-advice.monster.com/sal...empt/home.aspx
I personally know of no-one in a properly classified Exempt role who received overtime for their efforts. Indiviudual supervisors might independent provide for comp time but that is not a legal compliance response but a workforce retention practice.
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Old 08-20-2008, 06:27 PM   #7
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I agree that the consultant's comments on paying overtime to Exempt employees is not the typical guideline. The use of the term "Exempt" is to classify these positions as ones NOT subject to state and federal overtime rules/laws. To be an Exempt employee you have to work in positions that are professional and/or are very self directed in terms of fulfilling the role and how you go about doing it. The position is either Emempt or Not. When the position is Exempt the rules do not change to fit an exceptional need. Here is a link from Monster with an overview http://career-advice.monster.com/sal...empt/home.aspx
I personally know of no-one in a properly classified Exempt role who received overtime for their efforts. Indiviudual supervisors might independent provide for comp time but that is not a legal compliance response but a workforce retention practice.
nwsteve
That makes sense to me. I think you have the answer in what you are saying in this post.
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Old 08-20-2008, 06:28 PM   #8
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I wonder if he meant that doing certain things regarding hours an employee must work might accidentally cause the employee to no longer be classified as exempt. For example, one problem some employers would have with exempt employees is docking them for not putting in a full day. They were essentially treated as hourly, not salaried. If you pay hourly, it doesn't matter if they are otherwise classified as exempt, they won't be exempt.

Caveat: I know that the overtime rules changed a year, or two, or three ago so I am not up on things.
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Old 08-20-2008, 06:29 PM   #9
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My former employer started considering us exempt employees during the latter part of my career. Between then and shortly after I retired, they ran through every combination of calculating time that you can think of. Considering that they got very careful about following FLSA after a lawsuit in the 80's, I think there must be a lot of leeway in how they pay exempt employees.

They started with the concept that exempt employees couldn't get paid for overtime, even though policy mandated the type of operation that had to have a higher rank present before it could be conducted. Nobody was happy about getting called back to work in the middle of the night, for free, four or five nights a week. "Screw that" was the collective response and that idea was quickly scrapped after the gears in the big machine started to grind to a halt.

Concurrent with that plan was the concept that exempt employees had no set minimum hours to work. Whatever it takes to complete the job, 1 hour,40 hours or 160 hours a week, just get it done. That lasted right up until they discovered the guy that showed up for work long enough for his people to see he was there and then he spent the rest of the shift selling houses.

I'm not sure that they didn't try to play games with their response to that problem. The new policy was "a full day's work for a full day's pay". That doesn't necessarily say you have a set minimum number of hours to work, but the message was clearly "we'll nail you to the wall if you don't put in a full day on this job."

Then they gave exempt employees "paid exempt time" which was paid at the straight rate for anything worked over 8 hours a day. That was a beautiful thing, because it was calculated as additional pay which was was included in pension calculations as part of our regular salary. I volunteered for every extra assignment that came along during my last year.

After I left they were paying exempt employees time and a half for certain overtime, but that didn't last very long.

I think they are back to "paid exempt time" at the regular hourly rate and it is no longer calculated in the pension.

Edit to add: I agree with Martha, I thought the whole concept of being an exempt employee was there was no time clock or hourly wage. While we didn't actually have a physical time clock, if we wanted to take off for part of a day we were required to burn some form of leave. Every two weeks when the time report was submitted for exempt and regular employees, the computer would kick it back if it didn't add up to 80 hours of work or leave for each employee.
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Old 08-20-2008, 06:46 PM   #10
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I thought the whole concept of being an exempt employee was there was no time clock or hourly wage. While we didn't actually have a physical time clock, if we wanted to take off for part of a day we were required to burn some form of leave. Every two weeks when the time report was submitted for exempt and regular employees, the computer would kick it back if it didn't add up to 80 hours of work or leave for each employee.
Same here. We have a paper sign in, sign out sheet. We also have a computer timesheet that we have to log into, saying how many hours we worked each day. It has to add up to exactly 80 for each two week time period, and if it is less then our annual leave (vacation) time is applied. Our timekeeper reconciles the paper sign in sheet with the computer. The same is true for management.
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Old 08-20-2008, 06:51 PM   #11
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When I worked for county government, exempt employees were to log 40 hour weeks. If you worked more, you were credited with 'comp time' You could use it in place of vacation, or when you left the county they would pay you for it. If I remember they paid at half salary. If you were non exempt you got full pay, plus you got time and half comp if it was warranted. I think it maxed at 240 hours. Not bad for exempt. (Harris county TX)
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Old 08-20-2008, 06:55 PM   #12
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Edit to add: I agree with Martha, I thought the whole concept of being an exempt employee was there was no time clock or hourly wage. While we didn't actually have a physical time clock, if we wanted to take off for part of a day we were required to burn some form of leave.
I think what the law says and what is commonly practiced at big companies aren't the same thing.

I agree with Martha also, that exempt means "exempt from being paid overtime". From what I understood from my reading of the various laws, the flip side of that designation is that if you have to take some time out in the middle of a work day for a personal appointment, as long as you showed up that day then you were not required to take, say, 2 hours vacation time. The logic was that submitting for 2 hours of vacation was tantamount to implying you were being treated as an hourly employee.

If this is correct, this portion of the law is obviously not trumpeted to the exempt employees. I never had the guts to try it, and always tried to get my time in and work done by staying late or coming in early, or whatever.

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Old 08-20-2008, 07:13 PM   #13
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Have never heard of any exempt employee any place I worked being paid overtime for anything. Once in a great while there will be some emergency project which has people putting in huge hours and working through weekends for months at a time getting either a token "bonus" payment or a few special days off, but these were token small gestures nowhere close to what the hourly pay would have been.

Recently, my current employer has stopped all exempt employees from taking vacation in increments smaller than a day. It was explained to us that this was a state legal requirement that the company cannot compute hourly efforts by exempt employees and still maintain that they are exempt.
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Old 08-20-2008, 07:23 PM   #14
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I think it maxed at 240 hours. Not bad for exempt. (Harris county TX)
The county's policy was kind of screwy (I supervised HCSO people on a task force), you had to have 240 hours on the books in comp time before they paid for overtime. Not as bad as the state's, which was figured on a monthly basis and the form calculating it was written in Attic Greek or Ancient Mayan.
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If this is correct, this portion of the law is obviously not trumpeted to the exempt employees. I never had the guts to try it, and always tried to get my time in and work done by staying late or coming in early, or whatever.
Once they started the exempt-straight-time-that-counts-towards-the-pension plan I immediately ceased all whining.

Something I do remember about exempt employees was that allegedly the minimum level of discipline was a five day suspension without pay. I'm not sure if that was ever applied to anyone while I was still there, but it was said to be an FLSA mandate. Most people wouldn't worry about discipline at their jobs, but law enforcement agencies have a million rules and it's not possible to go a whole career without running afoul of something. They pass out reprimands and suspensions like candy. Most of it is mickey-mouse stuff, and to their credit they realize that and most discipline is in the form of a written reprimand. But I'm pretty sure I would feel like I had been abused if I lost half a paycheck because I forgot to log on and check my subpoena docket one day.
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Old 08-20-2008, 08:16 PM   #15
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When I last cared (26 months ago before RE), Illinois had pay and compensation laws that mandated 1.5X be paid for hours worked in excess of 40 in a week or 2X be paid for work done on the 7th day. Work done on a legal holiday was paid at 1.5X plus the worker also received the holiday pay.

Exempt employees were exempt from the benefits of these laws. That is, exempt workers might work more than 40 hours in a week or work a seventh consecutive day or work a holiday and receive no incremental pay beyond their normal salary.

At the MegaCorp where I toiled, exempt employees were eligible for compensation (at 1X) in certain cirmumstances and at the discretion of the manager. One example would be a production supervisor working Saturday along with his/her non-exempt staff during busy production periods.

Engineers, up to a certain grade level, might also receive overtime pay. If an engineer was asked to come in over the weekend to take data from product undergoing a thermalcycle test, the manager would probably offer extra pay. Staying late to finish a report because you took a long lunch and spent hours on the phone with your daughter's school because she was caught smoking in the lady's room, eeh.....probably no extra pay.

The authority to provide extra pay to exempt workers gave managers a tool to get things done and was frequently helpful. On the other hand, differences on when it was handed out varied from manager to manager, department to department, and facility to facility because HR guidelines were vague. Some hard feelings developed.

By the time I retired, MegaCorp issued new, more specific guidelines that dramatically cut back the amount of overtime compensation exempt employees received.

To OP's original question..... It's a state by state issue when overtime must be paid. Exempt employees are exempt from the state laws. Individual companies are free to pay more liberally, but never less liberally, than the law states. Exempt overtime pay is a two edge sword sometimes helping, sometimes hurting management's ability to motivate exempt employees during overload periods.
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Old 08-20-2008, 08:28 PM   #16
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I think what the law says and what is commonly practiced at big companies aren't the same thing.

I agree with Martha also, that exempt means "exempt from being paid overtime". From what I understood from my reading of the various laws, the flip side of that designation is that if you have to take some time out in the middle of a work day for a personal appointment, as long as you showed up that day then you were not required to take, say, 2 hours vacation time. The logic was that submitting for 2 hours of vacation was tantamount to implying you were being treated as an hourly employee.
It may be even more subjective at small companies (or at least the subset of them to which I have been exposed). My understanding is if an exempt employee "shows up" during the day, it counts as a day's work. The flip side is that the exempt employee is expected to get the work done on time, whatever it takes (even working unpaid overtime). The "whatever it takes" part gives the exempt employee some latitude, but most employers do not honor this latitude and require exempt employees to be at work during all "regular business hours" (or use vacation, PTO, or whatever it is called) *AND* get their work done on time, even if it means working unpaid overtime. These days, most employers know that they are in a buyers market and can get away with working both sides of the situation.

The bottom line is that most employers will do whatever they want to do.
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Old 08-20-2008, 08:36 PM   #17
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In my last job before ER, I worked as an exempt employee for a large west coast aerospace company and was paid overtime. Overtime for exempts is common in that industry. I never encountered it elswhere. It was paid as stright time (no time and a half) and must approved by the supervisor for any exempt below "management" level. "Management" did not get paid for OT.

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Old 08-20-2008, 08:43 PM   #18
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Since people have mentioned overtime as a matter of state law, I should state that overtime is a matter of both state and federal law. The federal Fair Labor Standards Act has wage and hour requirements, as do most states. Sometimes the FLSA doesn't apply to a business, but most often it will.
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Old 08-20-2008, 08:43 PM   #19
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The one advantage of being an exempt employee is that they cannot dock your pay if you do not put in 40 hours. There is one employee in my office who also does off Broadway. No one really knows how much time she puts in but she doesn't always have the fastest of responses.
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Old 08-20-2008, 10:06 PM   #20
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Have never heard of any exempt employee any place I worked being paid overtime for anything. Once in a great while there will be some emergency project which has people putting in huge hours and working through weekends for months at a time getting either a token "bonus" payment or a few special days off, but these were token small gestures nowhere close to what the hourly pay would have been.

Recently, my current employer has stopped all exempt employees from taking vacation in increments smaller than a day. It was explained to us that this was a state legal requirement that the company cannot compute hourly efforts by exempt employees and still maintain that they are exempt.
I got paid overtime as an exempt employee once, but it was a rare combination of factors that caused it. At our company, the only exempt that got paid overtime were those who were specifically supporting production in a direct way (I was a team leader for an hourly shop floor production team). I got paid hourly if I had to come in on a day I was not normally scheduled to run production. If I just came in to catch up on office work or whatever, I did not get paid. I always needed to get advance approval for the OT. Also, the amount they paid per hour was a fixed dollar amount, for example $28/hour. Even if two employees made different annual salaries, their OT pay was exactly the same.

I have no idea if this was just a company set of rules or in some way influenced by labor laws.

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