Is Your Employee Compensation Right?

An issue has recently come up within the CompassCare OT network of PRCs regarding employee compensation. Namely when is it right to determine if an employee should be paid for holidays and whether or not that employee should be salaried and therefore exempt from being paid overtime?

Regarding holidays and paid time off it is right to be policy driven. Typically organizations only provide holiday pay for those who work full time. Part time workers generally do not get paid holidays. Also, it is a matter of policy to determine which holidays will be observed by your organization. The big federal holidays are typical like Labor Day, Memorial Day, New Year’s Day, Christmas Day, Thanksgiving Day and Independence Day but you may want to add a few others such as New Year’s Eve Day, Christmas Eve Day, Good Friday, etc. So when a holiday falls during a weekend or when your office is otherwise closed it is no big deal for part timers because they would not get paid anyway but your full time employees should be able to ‘bank’ it and take the day at another time since that paid time off is as you said a ‘benefit’ and an employee should not be penalized if the calendar works against them.

Regarding the issue of getting paid a ‘set amount’, this is determined by the Fair Labor Standards Act of 1938. This is a Federal law regulating when an employer can and cannot do this. The term used by the government regarding a person who gets paid a predetermined amount irrespective of hours worked is ‘exempt employee’. This means that the employee is exempt from the laws requiring overtime pay.

The term used by the government regarding a person who gets paid by the hour is ‘non-exempt employee’. This means that the employee must receive overtime pay when working more than 40 hours per week.

Generally speaking it is up to the employer to determine whether an employee is exempt depending on their salary and the type of work they do. ‘Exempt employee’ is a class typically referred to as ‘White Collar’ exemptions. This category is comprised of executive, administrative, and professional employee types. This means that an employer cannot assign exempt status to just any employee they want since it could prove an unfair labor exchange. The following are criteria for determining exempt employee status and can be found at the following website: http://www.blr.com/compensationtips/exempt-nonexempt .
“Exempt white-collar employees must generally be paid on a salary basis and receive a minimum salary of at least $455 per week. (There are exceptions: Computer programmers, systems analysts, and similar employees may be exempt if they are paid at an hourly rate of $27.63 or more). To be exempt, employees must generally be paid a predetermined amount each pay period. The amount paid may not be reduced because of a variation in the quality or quantity of the work performed. With limited exceptions, the employee must receive his or her full salary for any week in which he or she performs any work, without regard to the number of days or hours worked. However, the employee need not be paid for any workweek in which he or she performs no work.”

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