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Exempt employee does some hourly work? Here’s how to preserve exempt classification

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in Firing,Hiring,HR Management,Management Training,Performance Reviews

Here’s some help for HR professionals trying to do all they can to safeguard their organization’s exempt/nonexempt employee classifications—especially in an economic climate that requires companies to do more with less:

As employees assume more duties out of necessity, “mission creep” may put some exempt employees close to the 50% guideline for performing exempt vs. nonexempt work. That could endanger their exempt status.

Advice: Review your organization’s performance appraisal system to make sure exempt employees are strictly evaluated on how well they perform their exempt duties. Break out any nonexempt tasks, have the employee perform them voluntarily and pay for them separately.

Recent case: John Berscheid worked for Northwest Respiratory Services as a branch manager. He was the only branch manager who also was a respiratory therapist. His annual pay was $54,000 per year, which he received in even weekly amounts.

His duties included directing the daily operations of the branch, facilitating communication between the branch and corporate headquarters, dispatching employees, setting up routes, assuring regulatory compliance and hiring and firing employees.

In addition, Berscheid signed up for on-call work as a respiratory therapist. For calls he accepted, he was paid an hourly rate. At first, that rate was about $27 per hour.

Later, the amount jumped to more than $40 per hour when a new HR staff member was hired. She mistakenly thought Berscheid was an hourly employee and thus paid him for on-call work as a respiratory therapist at time-and-a-half. When she discovered the mistake, she changed the rate back.

Berscheid sued, alleging he had been wrongly classified as exempt.

But Northwest Respiratory Serv­ices argued that his main duties were clearly management-related, and that his nonexempt duties were paid separately when he was on call and had already completed his management duties.

It also showed the court that when Berscheid was evaluated, the only factors considered were his management ones. That was enough for the court to toss out Berscheid’s case. (Berscheid v. Northwest Respiratory Services, No. 09-3392, DC MN, 2011)

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