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Salary or not?

I own 2 auto shops and both are under different corporation names. I have an employee who i am thinking to promote to manage both of the location. He would be putting in more than 40hrs a week at each of the places so i was thinking about putting him on salary. Since both the businesses are under different corporation name i would have to put him on salary at both places which i might not be able to afford. What is the minimum requirement for an employee salary who puts in well over 40hrs a week in each business a week. What would you suggest would be the best practice in this situation. Some of the options i was thinking about included putting him on salary in just one location but he will also manage the other location, or keep him hourly and pay him overtime from both places. thank you

There are several issues to consider when determining if an employee should be classified as salary exempt or hourly.

Simply putting an employee on salary does not eliminate the need to pay him overtime. Under federal law, only employees in certain categories qualify as exempt employees. This manager might qualify if a) he supervises 2 or more full-time employees with independent authority to hire and fire them and b) he does not spend any significant amount of time in manual labor. (And employee who engages in manual labor, such as working as an auto mechanic, is never exempt. Even if he also supervises other people, he is not an exempt employee.) Consult these fact sheets to see if this employee could be exempt: and

It sounds like you are planning on this employee working more than 80 hours per week, which is a lot.

Under the federal FLSA, an exempt employee must be paid a salary of at least $455 per week before taxes. Some states have a higher minimum salary for exempt employees. If you put the employee on salary at each business, he would normally have to be paid $455 per week by each business. Consult your accountant. There may be a way to put this employee on salary at one shop, but have part of the cost appear on the other shop's P&L.

The easiest and cleanest solution would be to simply pay this employee on an hourly basis, and pay him overtime when he works more than 40 hours per week. This would mean that if the employee works a total of 84 hours at both shops combined in one week, you would pay him for 44 hours of overtime that week. (Because the employee is working for the same employer, he cannot work 40 hours of straight time at each shop before being paid overtime. The U.S. Department of Labor would see this as a conspiracy to violate the federal overtime law. Even if the employee agreed to this arrangement, it would be illegal.)

Making the employee hourly might be more expensive, but it has none of the legal pitfalls of putting the employee on salary. It is always legal to treat an employee as hourly, regardless of his job duties. This would also be the only available solution if this employee spends a significant amount of time doing actual repair work or working with his hands.

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