Exempt vs. Nonexempt: Watch out for tasks, time clocks when calculating overtime pay

Ensure that the method you use to track hours and calculate overtime is easily defensible and accurate. Under the Fair Labor Standards Act, it is your responsibility to make sure all time is accounted for.

Recent case: Gilberto worked for Trendy Collections, sometimes attending trade shows in addition to his work in the company’s main location.

He sued, claiming that some weeks he worked as many as 96 hours. Thus, he said, he sometimes made far less than the minimum wage (with no overtime) when his paycheck was divided by his claimed hours.

The employer asked the court to dismiss the case, presenting time cards as evidence. But some of the cards bore other employees’ names, so Gilberto challenged their relevance. The court said his case could go to trial. (Hernandez v. Trendy Collections, ND TX, 2018)

Beware assigning nonexempt tasks to exempt employees

Do you require exempt employees to pitch in and perform nonexempt tasks when the need arises? If those tasks are clearly outside their normal duties, this may net you an unpaid overtime claim.

Recent case: Several exempt employees, holding a variety of job titles, filed an overtime class-action suit against the restaurant where they worked. They claimed that they had been required to perform additional work beyond their normal exempt duties, including cooking, cleaning and taking care of the owners’ house, lawn and cars.

The employer said their claims should proceed individually, but the court disagreed. While the additional tasks were varied, their assignments were the result of a common decision, policy or plan—namely to have exempt workers perform additional nonexempt work beyond their job descriptions. (Song, et al., v. JFE Franchising, SD TX, 2018)

ask the attorney

Can we move paid hours around to fill in gaps in an employee’s schedule?

Question: “Our company gives bonus time for hours worked over 48 weekly. Can this time that they have already earned be used to fill in time lost? For example, a superintendent has 30 hours banked of bonus time. They worked 28 hours the following week; would it be legal to take his bonus time to bump up hours worked? He is an exempt employee.” Anonymous, North Carolina

Nancy Delogu, Esq.: I’m not sure what you mean by “gives bonus time for hours worked,” but I assume it is some sort of additional pay. Your question implicates at least two provisions of the Fair Labor Standards Act (FLSA): the salary-pay rule and the concept of “compensatory” time off. Your question concerns me foremost because you suggest that somehow you are counting his hours worked from one week to another. If an individual is to be considered a salaried overtime exempt worker, the “salary pay” rule dictates that he is entitled to receive the same salary each week regardless of whether he has worked more or fewer than 40 hours in that week. The only time that you can deduct from an individual’s salary is if he misses one or more whole days of work. Any day on which any work is performed must be compensated fully.

What is more, failing to treat workers who are exempt from overtime as hourly, by counting their hours worked and awarding additional monies for additional time worked may actually destroy their overtime exempt status. Moreover, the concept of “compensatory” time— tracking and then substituting hours worked over a 40 in a certain week to even out a week in which fewer than 40 are worked— is not permitted under the FLSA unless the hours are substituted in the same pay period, at least for private-sector employers.

If your employee has missed entire days of work in the second week, you are entitled to dock his salary for those days. Typically, workers substitute PTO (if available) in these circumstances so that they do not lose wages for the week. It is possible that the bonus program you describe is actually a program that allows the accrual of additional PTO, but it doesn’t sound as though this is the case.

I advise you to review your bonus program with a local qualified employment lawyer who can help you determine if the program fits your needs and the FLSA salary pay requirements, and if not, to revise it so as to ensure compliance.