Business

Lynne Curry: Exempt employee needs pay, slack

Q: Our whole senior management team works 40 hours-plus. In our field, that's expected. When our clients have tough situations, we can't just say, "Sorry, it's 5, I've got to go. I'll pick up where we left tomorrow."

As a result, we pay high salaries.

One of our team, however, became ill last March and has gotten sicker ever since. Because he never had taken a sick day in 10 years, he had a massive amount of leave that he could use to maintain full pay status. None of us ever expected his leave to run out, but it did.

At this point, we don't know what to do. On rare days, he can work eight or even 10 hours. Some days he can't work at all. Most days, however, he can work just an hour or two.

We've been told exempt workers get a full day's pay when they work only part of a day, but that doesn't seem fair to everyone else who is working an average of nine hours a day and drawing the same salary. We also don't want to put him on unpaid leave.

He has been a long-term, loyal employee and we want to partially carry him. We don't, however, have unlimited money. How do we do this in a way that is economically fair?

A: According to attorney Bill Evans, you can convert your employee from exempt to hourly status. This enables you to fairly pay him for the work he does.

"Although you might fear that this jeopardizes the exempt status of other similar employees, it doesn't," Evans said. "Employers may always elect to pay exempt employees, even chief executive officers, on an hourly basis. What would jeopardize the entire category of employees would be to keep this employee as a salaried exempt employee and then not treat him as a true salaried employee by docking him for the hours he doesn't work."

A second option, Evans said, is you could keep your employee exempt and simply change his work status to part time, with a reduced hourly expectation and reduced salary. As long as you pay enough to meet the Department of Labor's salary basis test (a weekly salary of at least $455) and don't dock your employee for days when he works fewer hours, you maintain his exempt status.

This second method has the advantage of flexibility as you don't need to ask your employee to punch a clock or work an exact number of hours weekly. You could give him a goal of 20 hours weekly but allow him to work more or less and still retain a stated salary.

As a variation, you can give your employee a set salary and OK additional hourly pay at a straight time (not overtime) rate for approved hours over a specific threshold. If done correctly, FLSA's current regulations permit this and you keep your employee's exempt status intact.

You can further secure his exempt status by clearly documenting that you are changing his pay status to accommodate him and not because of the job's requirements.

Because you formally acknowledge your employee's disability status with this document, you then need to continue to reasonably accommodate your employee. However, even if you don't document your employee's Americans with Disabilities (ADA) issue, it exists.

Most importantly, these methods enable you to continue to pay an employee who gave your company a lot during his first 10 years.

Finally, your remaining staff may want to donate some of their accumulated leave hours to this co-worker. If they desire to do so, let them. Any one of us could be in his shoes and need help.

-- Lynne Curry is a management trainer, consultant and president of Alaska's The Growth Company Inc. in Anchorage. E-mail her at lynne@thegrowth company.net.

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