Change In Exempt Status/Overtime?

I could really use your collective wisdom on this one and I apologize in advance for its length.

In March of 2000 we purchased a plant. We retained the plant's chief maintenance worker and promoted him to second-shift supervisor with responsibility over maintenance as well. This was clearly an exempt position and we treated it as such. Under our policy, we pay our exempt plant supervisors straight-time overtime for hours worked over 44 in a week.

So far so good. Fast forward to December of 2002. We merged this facility with another plant we closed. We also lost, through military leave, our maintenance worker. Now, we have moved another supervisor onto the second shift and are using the original maintenance worker as, well, as a maintenance worker. He also fills in for the second shift supervisor on occasion.

Clearly, this is no longer an exempt position. However, since we are paying him straight time o/t I was asked if we couldn't treat him as "salaried non-exempt" and pay him as we are now, except for paying straight time over 40 instead of 44. This would seem to be in line with what the DOL had us do when they decided one of our engineers was not exempt since he had only a 2-year degree. They calculated his hourly rate and told us we owed him half-time for the o/t hours since we had already paid him straight time for all hours worked.

The problem we have is that to make things right with the employee (who we really don't want to lose) we would have to make his hourly rate very high and start docking him for sick days, etc. It is felt to be a better solution (and more satisfying to the employee) to leave things more or less as they are, if we can without being in violation of the FLSA.

I would really appreciate your thoughts on this.

Comments

  • 8 Comments sorted by Votes Date Added
  • You said he is clearly not exempt. Yet you want to pay him straight time over 40 hours. Non-exempt's get time and a half over forty. I do not understand your comparison with the engineer as your reasoning why you can instead pay him straight time.
  • [font size="1" color="#FF0000"]LAST EDITED ON 05-06-03 AT 10:30AM (CST)[/font][p]I agree with MACE. If his status is so clear, where is your dilemma? All you need to do is obey the law.
  • Thanks - of course that was my idea - change him to hourly and pay time and a half. However, I think I explained things badly. When the DOL had us treat our engineer as nonexempt, they figured his hourly rate by assuming we had paid him straight time for all his hours - then we paid half time for all over 40 in a week. That is more like what Mgmt. wants to do here. They are not so much trying to avoid paying the overtime as to avoid changing the employee to an hourly status. What I'm looking for is the legal way to pay him semi-monthly AND pay him overtime for his hours over 40. Does that make more sense? We are not seeking to pay him less, just to pay him overtime legally without making him an hourly employee.


  • Why can't you just go back -- look at his w-2 for the last 12 months, or last year and see what he made gross.

    Then make him exempt, which it sounds like he is, and adjust his salary to that number.

    He gets the overtime you want to pay him, your not making him hourly, and he should be happy getting the overtime -- more or less in advance.

    DA ! DA !
  • Sunny, I am confused as to what you see as the change from the second shift supervisor position being "clearly exempt" to being "clearly non-exempt" now.
    What has changed in the duties that renders the position no longer exempt (assuming the original exempt "call" was correct)?

    By the way, there is salaried non-exempt provided for in FLSA regulations. If th eemplyee receives a salary based upon a fixed number of hours worked, in order to compute the hourly rate for overtime purposes (if the employee works more than 40 hours per week), the weekly salary is divided by the number of hours that salary is suppose to cover during the week, which may not necessarly be 40. When the employee works more than 40 hours a week, then that hourly rate is multiplied by 1.5.

    If the salary is paid when a non-exmept employee works fluctuating hours from week to week, you would still pay the set salary, regardless of the number of hours, the employee worked, but would only need to pay .5 on the overtime hours. To determine the hourly rate for the work week, the number of hours the emplyee worked including the overtime is divided into the salary.

    But remember if you put a non-exempt employee on a salary, you then need to pay that salary no matter how many days or hours the employee works (other then when overtime occurs). There is no docking pay for absences as there would be for exempts as permitted by FLSA.

    But again, please explain why you think the status of the second shift supervisor has changed.


  • As I read it he is now a maintenance worker occasionally filling in as 2nd shift supervisor. Sounds non-exempt to me.
  • Hatchetman:

    Thanks so much - that's exactly what the Ops. Director wants to do and your explanation was clear and succinct. He is non-exempt now because he is performing maintenance duties not supervisory duties. And yes, the purpose of this is to continue treating him as a "salaried" employee - that is not to dock him for any absences or remove any "privileges" he received as a salaried exempt.

    Thanks everyone for your help.

  • You should be able to change him to "salaried non-exempt" and then pay one half for overtime hours. Just remember, his regular rate of pay will change from payperiod to payperiod depending on his hours worked and paid by salary. For example if he worked 45 hours and salary is $400, for that payperiod his hourly rate is $8.88 and you would owe $4.44 per hour for the 5 hours of overtime. If he worked 50 hours and received his $400 salary, his hourly rate is only $8.00 for that payperiod and you would owe him $4.00 per hour for the 10 hours of overtime.

    Of course, you can keep it simple and always calculate using the higher amount for his hourly rate ($10 per hour if $400 pays for 40 hours.) If you always pay the $5.00 for the overtime, you wouldn't have to calculate rate for each payperiod.

    Confusing, but I hope this helps. Tks, Barbara
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