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Jan27

Can I have a salary employee clock in and out like the hourly ones?

Good Morning,

I am an office manager for an Endocrinologist and our Physician Assistant wants to be compensated for extra time she spends in the office. I told her the only way for me to know exactly how much time we are talking about is if she starts clocking in/out. I have everyone else on a smart clock. They clock in/out but her. I suggested for her during our meeting to start clocking in/out. Therefore, she gets compensated for that. I need to know for sure how much time we are talking about. She told me asking a salary employee to punch in/out was insulting. Our practice in located in central Florida and I have done some research on line and I do not see any law that prohibits me as an employer to have her to clock in/out. Could you please expand on this and tell me if I am able to establish this system with her?

Any information you can provide me with will be greatly appreciated.

Thank you in advance.

Sincerely,
Erika

Yes, we can expand on this. There are  a number of issues in your post, so this is rather lengthy. What you are requesting is reasonable, but it may also raise additional issues. The short answer is: it is completely legal to have a salaried employee clock in and out, but unwise to pay her additional for weeks when she puts in additional hours. Doing so may permanently make her an hourly employee.

First, a salaried employee can be either exempt or non-exempt — but most of the time, when someone says “a salaried employee” they mean “an exempt employee.” Exempt employees are never entitled to overtime or additional pay when they work additional hours. An exempt employee is paid a flat salary for all hours worked during the week, whether that is 20 hours or 80 hours per week. Not every employee can be exempt. The federal FLSA, permits an employer to treat certain categories of employees as exempt. Usually a Physicians Assistant qualifies as an exempt salaried Professional under the FLSA.

The federal FLSA requires an employer to accurately track hours worked for non-exempt (hourly) workers. There is no requirement that you track hours worked for exempt employees — but nor is it illegal or unethical to do so. Some companies do require exempt employees to clock in and out, just so they can monitor the hours worked. We disagree with the PA. If she is complaining about working a high number of hours, it is irrational for her to feel insulted when you ask her to clock in and out. Obviously, if you are going to consider raising her salary based upon a heavy workload, you need to know what that workload is.

Be very cautious about paying this employee more when she works additional hours. When an employees wages vary depending upon the number of hours worked in the payroll week, the employer is treating the employee as non-exempt. When you treat an employee as non-exempt, they become non-exempt permanently — and entitled to overtime at 1.5 times the employees average rate for the payroll week.  So if you pay this employee more this week because she worked 60 hours, she is no longer an exempt employee.

Note that simply tracking the number of hours that the employee works does not make her non-exempt — but varying her salary based upon hours worked does  make her an hourly (non-exempt) employee. Still, you should avoid possible discrimination by treating all the PAs alike, if there are several in the same office.

As an employer, you can establish minimum expected work hours for an exempt employee. There is no expectation that an exempt employee will work only 40 hours per week. Many employers require exempt employees to work 50, 60 or even 80 hours per week, and in a few cases, more. This may be a simple miscommunication. The PA may be assuming that she is being paid for a 40-hour week. In reality, most employers expect exempt employees to work “whatever it takes” to get the job done.  Again, there is no additional compensation over and above the weekly salary, for an exempt employee who puts in additional hours.

As an employer, you also have the right to change the work hours expected of an exempt employee. For example, she may have been hired with the expectation that she would work 40 hours per week. However, now the practice is busier (or staff has been reduced due to a soft economy) and she is working 48 hours per week without any change in salary. This is legal, and it is a situation the majority of exempt employees have faced in the past 3 years.

Sometimes an exempt employee will be called upon to do extra work when a colleague is on vacation or ill. Again, the exempt employee is not entitled to additional payment when this occurs — even if she works 60 or 80 hours per week, rather than 35 or 40 hours.

If the PAs job duties have significantly and permanently expanded since she was hired, or if she is working many more hours, then you may make a decision that her salary should be adjusted accordingly. For example, if the practice has expanded and she  is now working twice as many hours, you may want to increase her annual salary by $10,000 to $15,000. However, for the employee to remain exempt, this increase would need to be permanent — not intermittent, based upon hours worked.

The conclusion is that it is lawful and reasonable for you to have this employee punch in and out. In fact, it is wise to track the hours worked by every employee and is not insulting. However, it would be very unwise for you to vary this exempt employees wages based upon the number of hours worked in the payroll week. Doing so would make her an hourly employee. A better tactic is to tell the employee that the extra hours she is working will be tracked, and considered with her total performance when annual evaluations are done. At that point, an increase in salary will be considered.

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This entry was posted on Friday, January 27th, 2012 at 6:09 pm and is filed under
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5 Responses to “Can I have a salary employee clock in and out like the hourly ones?”

  1. Susan Haddix Says:

    May an employer require SOME, but not ALL exempt employees to clock in and out?

  2. hrlady Says:

    Hi Susan,
    The FLSA doesn’t require employers to track hours worked by exempt employees but doing so is not prohibited either. There are no regulations stipulating that employers must track hours worked for all or none exempt employees. It’s good practice to enforce a policy of clocking in/out to all employees not just some. However, doing so can be justified. For example, a company may need to track the hours worked by exempt employees in a specified department in order to bill a client appropriately. Consider why the company would need to track hours worked for only some employees. If it’s a legitimate business need, document it. Otherwise, uniformly and fairly applied policies are the best option.

  3. janice_rushton@yahoo.com Says:

    It is acceptable to pay a salaried professional employee such as a PA extra for weeks when s/he works more than a specified number of hours. A guaranteed minimum compensation without unlawful deductions is required.
    Here’s a nice write up I found online:
    Generally, an employee is paid on a salary basis if s/he has a “guaranteed minimum” amount of money s/he can count on receiving for any work week in which s/he performs “any” work. This amount need not be the entire compensation received, but there must be some amount of pay the employee can count on receiving in any work week in which s/he performs any work. Some “rules of thumb” indicating that an employee is paid on a salary basis include whether an employee’s base pay is computed from an annual figure divided by the number of paydays in a year, or whether an employee’s actual pay is lower in work periods when s/he works fewer than the normal number of hours. However, whether an employee is paid on a salary basis is a “fact,” and thus specific evaluation of particular circumstances is necessary. Whether an employee is paid on a salary basis is not affected by whether pay is expressed in hourly terms (as this is a fairly common requirement of many payroll computer programs), but whether the employee in fact has a “guaranteed minimum” amount of pay s/he can count on.

    The FLSA salary basis test applies only to reductions in monetary amounts. Requiring an employee to charge absences from work to leave accruals is not a reduction in “pay,” because the monetary amount of the employee’s paycheck remains the same. Similarly, paying an employee more than the guaranteed salary amount is not normally inconsistent with salary basis status, because this does not result in any reduction in the base pay.

    With some exceptions, the base pay of a salary basis employee may not be reduced based on the “quality or quantity” of work performed (provided that the employee does “some” work in the work period). This usually means that the base pay of a salary basis employee may not be reduced if s/he performs less work than normal, if the reason for that is determined by the employer. For example, a salary basis pay employee’s base pay may not be reduced if there is “no work” to be performed (such as for a plant closing or slow period), and a salary basis employee’s base pay may not be reduced for partial day absences. However, employers may “dock” the base pay of salary basis employees in full day increments, for disciplinary suspensions, or for personal leave, or for sickness under a bona fide sick leave plan (as for example if the employee has run out of accrued sick leave).

    Thus, there can be “permissible” and “impermissible” reductions in salary basis pay. Permissible reductions have no effect on the employee’s exempt status. Impermissible reductions may, in that the general rule is that an employee who is subjected to impermissible reductions in salary is no longer paid on a salary basis, and is therefore nonexempt. However, employers have several avenues by which they can “cure” impermissible reductions in salary basis pay, and as a practical matter these make it unlikely that an otherwise exempt employee would become nonexempt because of salary basis pay problems. The salary basis pay requirement for exempt status does not
    apply to some jobs (for example, doctors, lawyers and schoolteachers are exempt even if the employees are paid hourly).

  4. janice_rushton@yahoo.com Says:

    Further support for there being no inconsistency between FLSA salary pay requirements and paying extra to a salaried exempt professional employee for hours over a certain amount per week, say 40 or 45 hours. This is from the US DOL website:

    Salary Basis Requirement
    To qualify for exemption, employees generally must be paid at not less than $455 per week on a salary basis. These salary requirements do not apply to outside sales employees, teachers, and employees practicing law or medicine. 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.
    Being paid on a “salary basis” means an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work. Subject to exceptions listed below, an exempt employee must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked. Exempt employees do not need to be paid for any workweek in which they perform no work. If the employer makes deductions from an employee’s predetermined salary, i.e., because of the operating requirements of the business, that employee is not paid on a “salary basis.” If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.

    http://www.dol.gov/whd/overtime/fs17g_salary.pdf

    The restrictions apply regarding reductions from the salary not extra pay

  5. hrlady Says:

    Hi Janice,
    Thanks for the extra info! Although the FLSA allows exempt employees to receive additional compensation over their base pay for extra work, it’s not recommended to pay exempt employees per hour worked. The guidelines are clear that an exempt employee’s predetermined salary must not vary based on quantity or quality of work. Compensating above the salary base doesn’t automatically nullify the salary basis test. However, consistently treating an exempt employee as a non-exempt employee may place the employer at risk for improper deductions and jeopardize the classification. Employers more commonly award exempt employees for additional work by providing a flat sum, bonus or time off.

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