Giving Exempt Employees Extra Pay Is Risky Business — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Giving Exempt Employees Extra Pay Is Risky Business

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Q. Our company pays overtime to salaried supervisors for hours they work over 40 in a week. I have never heard of this compensation practice. Is it legal? —C.H., Colorado

A. It's very risky to pay an exempt employee additional compensation—including overtime pay or comp time off—if that compensation is directly tied to the number of hours worked. On its own, this practice won't erase the employee's exempt status. But it would raise the eyebrows of a Labor Department inspector during a wage-and-hour audit.

As a practical matter, if the worker is obviously an exempt employee, there's relatively less risk to giving additional compensation. For example, there's less danger paying a doctor or CEO overtime than paying it to a first-line supervisor. Tip: You're on safest ground if you avoid linking extra pay to additional hours worked.

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