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Topic: Employee is earning over $100 per hour. Should he be hourly?

Messages (2) Visitors (1185)

Member since 03/31/2010
Employee is earning over $100 per hour. Should he be hourly?
03/27/2012 / 1:16 pm    #1

They qualify to be exempt under both the executive exemption and professional exemption, yet we pay them an hourly rate. He does not get paid for overtime hours, but we do have him as hourly. Is this allowed?

Modification count : 1

Member since 05/29/2012
Re: Employee is earning over $100 per hour. Should he be hourly?
05/29/2012 / 4:52 pm    #2

Hourly and salary refer to the method in which the employee is compensated, either an hourly rate or a flat rate for a set amount of time. Exempt and non-exempt refers to the legal classification of the employee with regards to overtime payments. Exempt employees are not entitled to overtime, and non-exempt employees are. The rate of pay does not determine exempt status, but it can be a determining factor. (But, generally this only comes into play when the wage is low.)

The primary question you need to ask yourself is if the employee has a guaranteed wage. Will they be paid a certain number of hours regardless of the actual hours worked? If the answer is yes, then the employee is being paid a salary, regardless of how it is computed. If not, then the employee is actually being paid an hourly wage.

As to whether ot not the employee is exempt or non-exempt, you need to evaluate the position and come to that conclusion on your own or with the assistance of a competent HR professional.

If an employee is really non-exempt, you MUST calculate and pay overtime, the fines for failing to do so are quite nasty! (Especially in California where overtime is calculated based on a singles day's hours!)

If the employee IS exempt, then you need to come to an agreement as to what the minimum wage for the position will be. There is nothing saying you cannot OVER compensate an employee who is exempt. As long as the employee receives their agreed upon wage, you can grant additional performance bonuses or any other as you see fit. You ARE permitted to pay overtime to an exempt worker, they are just not legally entitled to this pay. What they ARE entitled to is the base salary. As long as you are not reducing this amount for any impermissible reason, you should be fine.


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