A short advisory transcript from Donna Genie clarifying misconceptions about hourly vs. salaried employees. Key points: salary does not automatically exempt employees from overtime; exempt vs. non-exempt status determines overtime obligations; salaried non-exempt employees must still receive time-and-a-half for overtime; employers should prefer hourly unless the role clearly meets exemption criteria and should consult HR. The speaker also warns of new rules about exemption salary thresholds effective January 1, 2020.
Questions this video answers
Donna Genie.
January 1, 2020.
Exempt means the employee is exempt from overtime and does not have to be paid time-and-a-half for hours over 40 per week.
Chapters
I hear a lot of misconceptions about hourly versus salaried employees, so I want to square some of these away. First, I'll preface this by saying I am not a human resources professional. You'll always want to consult with a human resources professional when making these kinds of decisions to make sure that you're fully compliant as there are a lot of consequences if you do something wrong here. First off, hourly versus salary. There are a lot of misconceptions. Salary does not mean that you don't have to pay the employee overtime anymore. So if you have an employee who is working 50, 60 hours a week, I'll often hear employers say, well, I think I should make them salary so I don't have to pay that time and a half for overtime. That is not correct. First off, salaried must be a position that is looking at both hourly and overtime areas. Now, what they're usually confusing is the difference between hourly and salary and exempt versus non exemption. Exempt is a status that you look at to say that somebody does not need to be paid overtime. Exempt positions include professional designations such as employees who are engineers, who are accountants, lawyers licensed in their profession. There are some other examples of what can meet the exempt status in the Department of Labor rules. However, again, I recommend highly that you consult an HR professional to clarify these positions. So exempt means they're exempt from overtime and you don't have to pay time and a half for hours over 40 per week. Non exempt positions, whether they are hourly or salaried, must be paid overtime at the time and a half rate. So for a salaried employee, if you have a salaried employee who makes the $30,000 a year, I don't know what that works out to per hour, but basically, if they work 40 hours every week, you'll be paying them $30,000 a year. However, if they work overtime, you're going to calculate an hourly rate and pay them at time and a half just like you would an hourly employee. So there is no benefit. You're not going to avoid paying overtime to a salaried employee who is non exempt. I really do strongly suggest keeping everybody at hourly unless you have an exempt position available. So keep that in mind when you're making your hiring decisions and when you're deciding on hourly versus salary. I am seeing a lot of cases where people are assumed to be salary and assumed that that means they don't have to pay them overtime. And that's not just the that's not correct. There are also going to be some new rules coming out January 1st of 2020 that are going to talk about the dollar amount that has to be paid for someone to be exempt from overtime as well. So keep an eye out for those new rules. If in doubt, speak with an HR professional and clarify your positions before there's a problem.
