Can’t I just ditch the time sheet and pay everyone a salary?
I get this question frequently. In many employment situations, it is easier to pay employees a salary because you can forecast your budget and don’t have to deal with surprise overtime. At the same time, many employees appreciate the regularity that comes with receiving a salary.
If it were that easy, I’d be out of a blog topic.
There is a distinction between what it means to be an “exempt” and a “non-exempt” employee. An exempt employee is essentially free from wage & hour laws like overtime, minimum wage, and rest and meal breaks. You can salary an exempt employee and not worry about tracking hours. The primary category of exemption is what we refer to as “white collar” employment.* If your salaried employee meets criteria for a two-part test established by federal and state standards that examine both the amount of salary and the types of duties for which the employee is responsible, he/she may likely be deemed a “white collar” exempt employee.
However, if your salaried employee does not meet the criteria in the two-part test, you should classify that employee as “non exempt” – and track hours to ensure compliance with minimum wage, overtime and rest and meal break laws. Some employers still choose to salary their non-exempt employees, which is fine – so long as the employer understands the obligation to comply with wage and hour requirements. And while we are on this subject, remember that overtime applies to employees on a weekly basis. In other words, if a salaried non-exempt employee works overtime in one week, you are responsible to pay overtime for that week.
* There are other exemptions besides “white collar” exemptions that do not apply the two-part test I mentioned. For example, some computer professionals and some skilled computer technicians qualify as exempt employees. However, the vast majority of exemptions are “white collar” employees.
I can help you with classifying your employees and other employment needs. Let me know if you would like to talk.