Question: “I have a question regarding nonexempt workers. Can they be paid salary, instead of hourly? For example, if an employee is hired as nonexempt, working 40 hours each week on a consistent basis, can he be paid a salary of $400 weekly. If approved overtime is worked, he is paid that in his salary also. I was told a nonexempt employee has to be paid hourly and can not be paid salary." —Betteanne, New Hampshire
Answer: No, a nonexempt worker cannot be paid on a salaried basis. You can tell him that he will earn $400 a week for a 40-hour work week, and require him to work no more than 40 hours a week, and that will look very much as though he does, indeed, earn a salary because the paycheck will show the same amount of gross wages for each week. However, if hours in one week exceed 40 hours, he would have to be paid overtime wages in addition to the “salary” for that week, at a rate of $15 an hour (time and one-half the $10 hour he is earning in your example, if you divide his salary by the number of hours worked to get the actual hourly pay rate).
Can we self-fund a paid disability leave program?
Question: "Can we offer a paid disability leave without contracting with an insurance carrier, essentially self-fund the paid leave? If we can, do we have to have a plan document drafted for such a plan?" —Jessica, Colorado
Answer: Yes, you can self-fund a paid disability leave program. No, you don’t need to have a plan document drafted to implement such a program. As it turns out, a self-funded plan is actually considered a "payroll practice" and not a plan subject to the Employee Retirement Income Security Act (ERISA) rules that govern many pension and welfare benefits. This means no plan document is required (or even appropriate). Insured disability benefits, on the other hand, are ERISA-covered benefits.
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Question: "Can employees have a different pay rate for driving time? All driving time is specified on our time cards separately from normal working hours and calculated as all hours worked. Every day, the employees average 1.5 hours of driving time and eight hours of actual working hours. So can these driving hours be paid at a lower rate than the normal working hours rate?" —Terry Ann, Texas
Answer: Yes, you can pay individuals different wages for different types of work as a matter of federal law.
In your example, each employee would work 40 hours a week at his or her “regular” rate, and work 7.5 hours of paid at the driving rate. Each non-exempt worker would thus be entitled to 7.5 hours of overtime pay for that work week. The overtime rate is determined by calculating the employee’s average wage rate for the week, and then paying time-and-a-half for the overtime hours.
Assuming, for example, that the following week an individual employee works 32 hours at his “regular” rate, but spends 10 hours driving. He would be entitled to two hours of overtime pay, but the overtime rate would be different than the rate he was paid the prior week, because a greater proportion of his time would have been spent in the lower-paying driving activity. So, if you elect to adopt such a system, you must take steps to scrupulously track and calculate the correct overtime rate for each affected worker.
Should vacation leave be used prior to FMLA benefits?
Question: "Can fringe benefits, such as vacation days, be taken prior to maternity leave benefits? Should fringe benefits be used prior to FMLA benefits?" —G., New Jersey
Answer: Whether an employee can be required to exhaust accrued vacation time before or concurrent with the use of Family and Medical Leave Act (FMLA) leave is entirely a matter of company policy. The regulations implementing the FMLA provide that an employer can require an employee to exhaust her vacation time while taking FMLA leave, which is unpaid.
If your company decides to require employees to draw down accrued vacation or sick leave while taking FMLA leave, you should communicate this fact to all employees in your handbook, and ensure that it is applied even-handedly. Many employers do require employees to exhaust their accrued vacation while on an FMLA qualified leave, but probably an equal number do not so require and allow employees to take vacation time off in addition to FMLA leave.
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