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Paying exempt employees extra? Be sure to clarify status

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Do you pay exempt employees extra for working extra hours? If you do, make sure you clearly indicate that you still consider the employees as exempt. That way, should you stop making the payments, you haven’t created unreasonable expectations.

Never refer to the payments as “overtime!” Instead, clarify that they are bonuses paid to exempt employees.

The key is to make sure you have sound reasons to back up the employee’s exempt classification. Incorporate those reasons into the job description, and you’ll be able to defend your position if the employees balk at the removal of extra payments.

Recent case: When a nuclear power plant decided to save on labor costs by eliminating extra payments to technical writers it already listed as exempt employees, the writers balked and sued. They alleged they were wrongly classified as exempt.

But the plant trotted out job descriptions and testimony that demonstrated the technical writers operated independently with little supervision. Although they had a set of guidelines to follow, the writers were free to come up with individual and novel solutions within those guidelines. The court concluded they were exempt under the administrative exemption of the Fair Labor Standards Act. (Renfro, et al., v. Indiana Michigan Power Company, No. 06-1935, 6th Cir., 2007)

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