A Few FAQs Regarding Overtime Exempt Employees

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Hey Compliance Warriors!

Frequently, I get questions from our members asking questions about the requirements surrounding “salaried” employees. There are 2 kinds of salaried workers. Exempt and non-exempt. I am going to discuss a few actual questions surrounding overtime-exempt employees as described in this FLSA fact sheet. https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/fs17a_overview.pdf


Can we deduct their pay for working 2 days out of the 5-day work week?

Maybe. There are only a few reasons that overtime-exempt employees can suffer salary deductions. Deductions from pay are permissible when an exempt employee:

  • is absent from work for one or more full days for personal reasons other than sickness or disability;
  • for absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness;
  • to offset amounts employees receive as jury or witness fees, or for military pay;
  • for penalties imposed in good faith for infractions of safety rules of major significance;
  • for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions.
  • Also, an employer is not required to pay the full salary in the initial or terminal week of employment, or for weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act.



Can we switch them to non-exempt for any reason?

Employers must treat “similarly situated employees” consistently. So, no. Employers are not allowed to randomly reclassify one worker. However, FLSA does not require employers to use overtime exemptions. DOL actually prefers that employers pay a fair wage plus overtime. The status of overtime-exempt is considered to be an employer benefitting allowance. DOL considers the non-exempt classification to be more beneficial to the employee. So, classifying workers as exempt should be done by the letter of the law and should be consistent with all similarly situated workers.  https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/fs17a_overview.pdf


Are we allowed to track their hours worked?

Yes. Tracking the time of overtime-exempt employees is not illegal or discouraged. However, an employer cannot track time for the purpose of paying and deducting salaries. Time might be tracked for FMLA calculations, PTO accruals, or some other reason that is not related to the base salary of an employee.


Can we require them to work 40 hours?

You can but not as a condition of paying the full salary each week. The FLSA says that salary cannot be deducted due to the “quality or quantity” of work performed.   https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/fs17g_salary.pdf


Do they ever qualify for overtime? 

The reason employers classify qualified positions as overtime-exempt is to eliminate the expense of paying overtime. So, no. Overtime is not in play. However, the DOL has said that exempt employees can be paid extra money, bonuses, extra PTO, or any other extras an employer deems appropriate to show appreciation for all of the extra work exempt employees normally do.  https://webapps.dol.gov/elaws/whd/flsa/overtime/cr6.htm

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