Human Resources: Can You Pay An Exempt Employee On An Hourly Basis?

Young Business WomanQuestion: Is it possible to have an exempt employee who is paid on an hourly basis?

As a human resources department, we sometimes get unusual requests for compensation.  We have an employee who was working full-time, 40 hours a week, as an exempt employee (falls under the learned professional exemption). He is now going back to grad school and wants to work part-time during his school breaks (summer and winter).When he does so, he will be doing the same duties and activities as before. Would it be possible to change him to an hourly rate since his work schedule will be sporadic? If we change him to hourly, does this also mean that he goes from exempt to non-exempt status, meaning he will now be eligible for overtime?

Response: To qualify for the professional exemption, an employee must not only meet the duties test associated with that exemption but must also be paid on a salary basis. Payment on an hourly basis renders any employee ineligible for this exemption. If the subject employee goes to part-time status (also incompatible with exemption status) while he attends school and is paid on an hourly basis, he will not qualify for exemption status. The employer should reclassify him as non-exempt and in this regard, must ensure that minimum wage and overtime obligations are satisfied (although it is unlikely he would work more than 40 hours per week as a part-time employee). As a non-exempt employee, the employee must keep accurate records of hours worked too. We would encourage you to consider revising his job title; indeed, while job title is not dispositive of exemption status, having exempt and non-exempt employees (or even the same employee) carry the same job title can create confusion and jeopardize the exemption (even if it was proper, previously). For more information on exemption criteria, please see the Department Of Labor Website.

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