Salary vs. Wage

[bentoncopcs]

ArkansasWhat is the name of your state?

Hello,

I am an Employer in the state of Arkansas. Computer Store - My employees I'm needing guidance with are a store manager position, and computer technicians (repair and service pc's). In the past and presently I pay them all a weekly salary. They get the same amount each week unless they take the day off (sick or personal reasons), then I deduct their pay for that week by that amount. For instance if they get $400 week and they miss one day of work, they would get $320 week. All salaries are based on 40 hours work each week (8 hours + 1 hour lunch per day). My question is, is this actual salary employees or are these hourly employees? I am getting confused on the term wage vs. salary. Then to confuse things more, if they work on a Saturday (we are open 4 hours on Saturdays), then they would just "accumulate 4 hours of time to take off at a later time. Is this legal? I've been reading but am still confused. The employees seem happy with this arrangement but I just want to be sure things are ok.

 

[Beth3]

I am getting confused on the term wage vs. salary That's because those are meaningless terms from a legal perspective. They only refer to pay methods.

Then to confuse things more, if they work on a Saturday (we are open 4 hours on Saturdays), then they would just "accumulate 4 hours of time to take off at a later time. Is this legal? Not for non-exempt employees who MUST be paid time and a-half if they work in excess of 40 hours in any 7-day pay period. Comp time is expressly prohibited from one pay period to another.

The legal issue here is which employees may be classified as exempt (i.e. may be paid on a fixed weekly salary and need not be paid overtime) and which employees must be classified as non-exempt (i.e. typically are paid by the hour and MUST be paid overtime.)

What you need to figure out is which jobs are exempt and which are non-exempt. The prevailing federal law is the Fair Labor Standards Act, which may be found at www.dol.gov. That can be fairly hefty reading for a novice though. What I suggest you do is contact your State's Department of Labor/wage and hour division and ask if they can send you information on how to determine exempt and non-exempt status. (I would not tell them that you're concerned you may be in violation though; no sense in inviting trouble.)

Even though your employees may be happy with this arrangement, my hunch is that you are violating the law by paying everyone on a salaried basis with no OT pay. It only takes one disgruntled employee (or ex-employee) to call the DOL and make a complaint and then you'll have trouble on your hands. It will be much better for you if you sort this out yourself in the short-term and start paying your employees as required by law.

 

[paralegal30]

How about being hired as salary and paying you hourly?

I accepted a job in Virginia and the acceptance letter read "for the annual salary of...." However, after I was working a week I found out they were paying me "hourly" and not salary. Is this legal when the acceptance letter said for the annual salary?

 

[cbg]

Yes.

First of all, an offer letter is NOT a contract.

Secondly, both "hourly" and "salaried" are simply pay methods and not legal terms. The terms that matter for legal purposes are exempt and non-exempt.

Although most people (wrongly) consider that exempt is interchangable with salaried and non-exempt is interchangable with hourly, that is not true.

A non-exempt employee can be paid on a salaried basis as long as they are also paid overtime when due. An employee who qualifies as exempt CAN be paid hourly if the company chooses to do it that way.

ANY employee can legally be paid on a non-exempt basis; however, not every employee can legally be paid on an exempt basis.

It is quite common for an offer letter to reflect the total annual wage, regardless of what term is used. It does NOT obligate the employer to pay on a salaried basis.

 

[paralegal30]

What is the name of your state? Virginia

Thanks for the reply. It helped clarify alot of questions.

 

[willingtocope]

Six times minimum wage?

CBG...is the old DOL rule about an "equivalent hourly rate" of six time minimum wage being the thing DOL used to determine who must be paid time-and-a-half for hours in excess of 40 per week still in effect? I know the Bush Administration was screwing with the OT rules, but I don't know if they've been changed or not.

 

[cbg]

The new rules go into effect on August 23rd.

Under the new rules, an employee cannot be considered exempt unless they are earning a minimum of $455 per week. You cannot pro-rate for part time; if they are working part time and their earnings per week come to less than $455, they cannot be considered exempt EVEN IF they would be earning over $455 if full time.

There are other requirements, but this appears to be the baseline.

Is that what you meant?

 

[willingtocope]

Sort of...

$455 per week = ~ $23,600 per year or 11.37 per hour. I thought the bush whackers were increasing the amount someone could be paid before OT was no longer required. Did congress stand up to that?

 

[cbg]

I'm still not quite clear on what you're asking.

Under the new rules, there is a Highly Compensated Exemption which did not exist at all under the old rules. An employee who has a total annual compensation of at least $100,000 and who customarily performs at least one of the exempt duties of or responsibilities of an executive, administrative or professional employee, does not need to be paid overtime. There was no equivalent exemption under the old rules.

 

[willingtocope]

There used to be...

There used to be a simple method of determining overtime exempt from non-exempt. The rule was anyone paid more than 6 times minimum wage was exempt from overtime. (Perhaps that was just an Ohio law). Anyway, I just looked at

http://www.dol.gov/asp/programs/guide/minwage.htm

and looks like all the special lobbists have had a crack at it since the last time I looked into this completely. I think it now boils down to "call us, and we'll look at each case individually, and give your our opinion, which of course in non-binding for which you might be sued later if you choose wrong".

Wow...the best government money can buy...

 

[cbg]

You're kidding! Anyone at over 6 times minimum wage was automatically exempt? Must have been just a state thing; that's certainly not part of the FLSA. (And I'm not sure that would even have been legal - it's your job duties that determine your exempt/non-exempt status unless you are earning less than $125/$250 (depending on which exemption you're using) under the old law or $450 under the new. - not what you're earning.)

 

[schmenge]

Clarification/Opinion Needed

The new rules go into effect on August 23rd. Under the new rules, an employee cannot be considered exempt unless they are earning a minimum of $455 per week.

I work in Minnesota for a company with roughly 250 employees. Today I received word that I am going to be considered an exempt employee starting 8/23. While I will enjoy the "status" of being an exempt employee, I will not enjoy it more than I will miss the overtime and on-call pay. Anyways, I will stop whining and get to the point...

In reference to the above quote, I found the following on the Department of Labor website:

"Exempt computer employees may be paid at least $455 on a salary basis or on an hourly basis at a rate not less than $27.63 an hour."

Is this a specific exception to the base rule? If so, how the hell does one interpret it? The wording seems quite poor. Why on earth would a sane person put the phrases "at least" and "not less than" in the same sentence when they mean the same thing?

Here is my take on what this says when converted to Plain English:

"If you are a geek paid on a salary, Uncle Sam is willing to let your employer deny you overtime if you make over $11.37 an hour based on a 40 hour work week. If you are paid hourly, however, your employer can only deny you overtime if you make over $27.63 an hour."

My interpretation *has* to be wrong, right? Well, it doesn't *have* to be wrong, but I would hope to see some semblance of logic built into our laws. I am a cynic by nature, and I don't need any more evidence that our lawmakers are fuggin idiots!

Any thoughts on what this caveat *really* means?

 

[schmenge]

Beuller? Anyone...Beuller?

No thoughts on my last post?

 

[cbg]

If you had started your own thread instead of piggybacking onto someone else's, you would have gotten a response. I found an excellent response to your question on another board but I couldn't find your post.

The responder is a former DOL investigator, and has forgotten more about the FLSA than I will ever know.

http://www.ahipubs.com/ubb/Forum1/HTML/008846.html

 

[schmenge]

Thanks for the link!

I probably should not have tacked that request for clarification onto an existing question...thank you for taking the time to point me in the right direction in spite of myself.

It is still my contention that the law was written by a bunch of crackheads, but at least Mr. Jennings' explanation makes sense of it by giving the history behind it.