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Payroll-Exempt & Non Exempt Employees

We are a Service company. We do inspections, Lab testing & Geotechnical Services. We have some employees as salaried exempt others as non exempt. Lately we have been faced with questions that we get answers all over the realm. We called Dept of L& I. They don't seem to answer our questions in a firm confident manner. They claim they once asked a Lawyer, think they have the answer, but really dont know. They will not ask again. So I am asking you, the working world. What do you know ! Lets say, you have an exempt Employee. He gets 120 days of vacation but no sick time. He sends in his time sheet stating 32 hours. He is salary, he doesn't want us to apply balance of hours to his open vacation. Should we just pay him based only on the 32 hours..? Do we have to pay him his salaried wage- 40 hrs? Owners say we have to pay him 40 hrs. Wouldn't everyone be only working 32 hours if they could sneak by this? One employee put down 16 hours of Sick. (his Dept gets sick) He has no sick time or vacation left to use for the year. He is an exempt salaried. Can I short his paycheck ? He put down on his time sheet that his work week with the 16 hours of sick came to 48.50 hours. Am I supposed to apply the extra 8.5 hours towards the sick ? Since he wasn't actually working on our companies work days, do I have the right to put down 16 hours against sick? I realize I can put towards sick with a negative number until he accrues up more again. What do we/ Should we be paying them without getting sued ? I have always read if you don't show up for work, you get docked the Entire 8 hours, Whether you work the rest of the week to make it 40 hours. Shouldn't it technically be based on the companies hours of 5 days a week, 8 hours a day? What is correct for a Salaried person ? Should an employee be Working the Company hours & days of the week or just put in there 40 hours? My point to owners was wouldn't everyone be working a 4 day week if they could get away with it? working 10 hours a day, have a 3 day weekend. ahhhhh.. I was told years ago, If you start your day at work but leave early, you technically get paid the entire day for being a salaried person. A good ethical person would put the balance of hours down as sick or pay.. Not this place. there rules are all over the place. What is correct. What is Legal, without getting sued.? Why I say this, is they have been sued before. They put down a non-exempt employee down as exempt. We didn't pay him overtime. After he was let go... He came back and sued us for all the overtime we shorted him. Worst part, I told them we should pay him OT. I have it in email. But they still pointed there finger at me. We wont get into that subject. Does anyone have any input or insight for me on this? I would appreciate it.


Topic Expert
Malak Kazan
Title: VP, Special Projects
Company: ERI Economic Research Institute
(VP, Special Projects, ERI Economic Research Institute) |

Labor laws are state-specific. Companies can set policies that comply with overtime and salary deduction rules yet be financially "fair" to both the employee and employer. For example, company can have a policy if salaried exempt employee needs to be out of the office for greater than 2 hrs, then accrued PTO will need to be applied. I would put together a draft "payroll" policy on work hours and have an FLSA employment attorney "approve" it. If you operate in several states, this will also need to be consider. Hope this helps.

(Borough Treasurer) |

We just went through a personnel policy revision to address a similar issue. Under the new policy, exempt employees no longer report hours on timesheets. Any PTO (another change with the new policy - formerly we had sick and vacation leave) taken by exempt employees is in half-day increments. Hourly employees who work at least one half their regularly scheduled work day have the option to take leave without pay or PTO for the remainder of the workday with supervisor approval. Salaried employees who work more than one half their regularly scheduled work day may take the remainder of the day without having to take PTO. It isn't perfect, but it is an improvement over the hourly/salaried confusion that was in place prior to its implementation. And supervisors are tasked with dealing with abuse of the policy.

(Manager) |

Does HR fall under you? Do you or anyone in the organization have a membership to SHRM? I would say this a good opportunity to use their advisory service. I've found that to be an awesome resource for things like this.

But, I'm curious if you have a company handbook and what does it say about this? What's your policy? That's a HUGE part of the determining what is legal here. You need to have policies in place, inform your employees, have them acknowledge receipt of handbook and policies, and follow it with everyone.

If you don't think you are experienced enough in drafting or editing a handbook and policies, hire a consultant. It's worth every penny. And no matter who drafts it, have it reviewed by an attorney. It's worth it. You could spend a little using their services now, or spend more when you get sued and raked because you didn't have a policy in place.

Also, there's a great blog post on Ask A Manager blog if you search for "salaried employees and missed days."

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