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Jan12

Converting salary employees to hourly employees

In Virginia, can we take an exempt salary employee and convert them to an hourly worker? Job duties would remain the same. Is there such a thing as an exempt hourly worker? If a workers job duties remain the same can you change their status year to year, (ie salary to hourly and back to salary?)

Thanks for posting a great question! There is no such thing as an exempt hourly employee. The first requirement of an exempt employee under the federal FLSA, or Fair Labor Standards Act, is that the employee must be paid a weekly salary, and that weekly salary must be at least $455. Hourly employees are always entitled to overtime when they work more than 40 hours per week.

In some cases an employer can take an exempt employee and permanently change their status to hourly employee. This can be done without changing the employees duties. However, if the employer switches the worker back and forth from hourly to salaried exempt, the state and federal enforcement agencies (including the U.S. Department of Labor) are likely to view this as an illegal attempt to avoid paying overtime.

Our suggestion: before you change this employee from exempt to hourly, check with the U.S. Department of Labor at www.dol.gov to make sure you are doing this in a legal manner.

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8 Responses to “Converting salary employees to hourly employees”

  1. Wm Kelley Says:

    I live in California. My Question is, What is requirement for changing Hourly employees to Salary employees. Does it matter what type of computer equipment you have to do your job. Is their Labor laws whic spell out what you have to do. Can your job discription be changed to make it possible for the change.

  2. Caitlin Says:

    Hi Wm! An employer can put any hourly employee on salary. However, that employee is still entitled to overtime, in most cases.
    Under both federal and California law, a salaried employee must meet certain criteria to be exempt from overtime. The decision is based on the employees primary job duties, not the job description or the title. The federal guidelines are below. The only difference is that California law requires a slightly higher minimum weekly salary for exempt employees. Search our archives, and you will find a wealth of informtion on exempt employees. HTH and thanks for reading the blogs!~ Caitlin

    http://www.dol.gov/esa/whd/regs/compliance/fairpay/fs17a_overview.pdf
    http://www.dol.gov/esa/whd/regs/compliance/fairpay/fs17e_computer.pdf

  3. Jim Says:

    Pharmacist are exempt hourly employees.

  4. Caitlin Says:

    Hi Jim! Pharmacists can be exempt hourly employees under some circumstances, but they can also be exempt salaried professionals or non-exempt hourly employees under federal law, depending upon the situation. The job title and job description alone do not determine exempt or non-exempt status. There are several other factors. And, California rules differ from those in other states. HTH, and thanks for reading the blogs!~ Caitlin

  5. Elizabeth Says:

    In Maryland, is there hourly exempt employees? I have an exempt employee (not specified as salaried in offer letter) that wants to get paid for a holiday in her first 90 days. Is the employer required to pay them for the holiday in their probationary period?

  6. hrlady Says:

    Hi Elizabeth,
    Employers in Maryland are required to comply with the federal Fair Labor Standards Act (FLSA). Under the FLSA, employees are exempt or non-exempt. Exempt employees receive a predetermined salary. They are not paid on an hourly basis.
    Exempt employees must receive their full salary for any week during which work is performed. Their salaries cannot be reduced for less than full week absences occasioned by the employer such as the employer closing for a holiday. Thus, assuming the employee performs some work during the workweek, he must be paid for the holiday even if company policy prohibits holiday pay for employees during their initial probationary period.

  7. Birchstone Says:

    We have a 3 year salaried employee that worked M-F, 8:30 AM-5:00 PM. This past school September, we allowed those hours to change to M-F, 8:30 AM-2:00 PM at the office then 3:00-5:00 PM remotely from home.

    This person has started to take advantage tgof this flexibility and now comes in the office maybe 2 days/week for 4 hours/day.

    We are a small construction firm and the flexibility was allowed as this is a single parent scenario and the child needs to be dropped off and picked up from school.

    Simply stated, the job responsibilities are not being met and the average time per week being worked is about 20 hours.

    What are our legal ramifications if we retract the flex time and change this employee from salary to hourly,M-F 8:30 AM-5:00 PM in office only?

  8. hrlady Says:

    Hi Birchstone,
    Schedules are a matter of agreement between employer and employee. So, if the employee’s responsibilities are not being met under her current schedule then you are within your rights to adjust her schedule to meet business needs. Of course, if an employment contract or collective bargaining agreement exists, the terms under such must be considered. Also, it’s important to keep clear records on why you’re changing the employee’s schedule. In terms of her classification change, the FLSA does allow for classification changes when necessary. In fact, nothing in the FLSA prohibits an employer from classifying an employee as non-exempt (hourly) even when the position meets the criteria for exempt status. Keep in mind, changing an employee’s classification should be on a long term or permanent basis and not change frequently. HTH!

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