Paying
an employee salary instead of hourly is just easier, right?! No more
dealing with figuring and paying overtime and turning in time cards.
Actually, legally some employees that you may want to pay salary may still be entitled to overtime pay and unpaid meal breaks.
Interested in paying your employee salary
In order to stay compliant by classifying employees correctly, first you'll need to determine if the employee is exempt or non-exempt. Exempt simply means that they are exempt from certain wage laws such as paying overtime.
Are the Exempt?
To
be classified as exempt, the employee’s job generally must satisfy both
a salary basis test and a duties basis test and meet the federal and
state minimum salary of $455/week.
- Salary Test: The salary must be a predetermined amount that is not varied based on quantity or quality of work. Exempt employees need not be paid for weeks in which no work is performed, however the general rule requires that the employee receive the full salary for any week in which work is performed without regard to the number of hours or days worked.
- Duties Test: Learn more about the Duties Tests here.
No hour tracking? Not so fast.
Just because you have decided to pay your employee salary, that's not a reason to have them quit tracking their hours worked!
Some valid reasons for tracking even exempt employees' hours:
- Client billing,
- Family Medical Leave Act (FMLA),
- 401(k),
- Hours-based benefits calculations,
- Paid time off (PTO) benefits, etc.
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