Under FLSA (Fair Labor Standards Act) law, exempt employees are allowed to give up overtime pay in exchange for a set salary, regardless of hours worked. This provides potential benefits for a company, where workloads are demanding, and certain laborious tasks could otherwise run into costly overtime pay. For all its advantages, however, businesses could encounter issues with timekeeping and attendance.
The laws and regulations affecting exempt employment may vary from state-to-state, and these may have different criteria. A qualifying employee for exemption must earn over the minimum threshold of $35,586 per annum (or $684 per week) to be exempt.
Typically, these positions are ‘white-collar,’ or describe skilled professionals, although exceptions may apply.
The main concern when it comes to time and attendance is the difficulty for an employer to ‘dock’ pay. ‘Docking’ describes where pay is reduced, and this applies to certain types of salaried employees. It is impermissible to dock pay from an exempt employee in most circumstances, as it reclassifies them as non-exempt. Therefore, employers must back pay all overtime as well as complying with other regulations.
Regarding personal leave, the FLSA says:
“Deductions from pay may be made when an exempt employee is absent from work for one or more full days for personal reasons, other than sickness or disability. Thus, if an employee is absent for two full days to handle personal affairs, the employee’s salaried status will not be affected if deductions are made from the salary for two full-day absences. However, if an exempt employee is absent for one and a half days for personal reasons, the employer can deduct only for the one full-day absence.”
There are also exemptions for sick leave, natural disasters, jury duty and more. It’s advisable to consult with a professional regarding exemptions.
Exempt employees can be a reliable and valuable resource for a business. But, if chronic lateness persists, this can become a point of frustration for a business. Dealing with attendance problems, however, it isn’t always straightforward.
So, what can employers do?
Time tracking isn’t micro-managing if used responsibly. It can be used to ensure that clients are billed correctly, or vacation days are allocated properly. It can also help employers with basic compliance matters, such as the requirement to keep a complete and accurate record of employment for staff currently on your payroll.
The ‘touch the wall’ rule for exempt employees means that, regardless of the amount of time worked, they must be paid for the full work week. This could be as little as making one work call, or 15 minutes of email admin.
Whilst most exempt employees understand their responsibilities, without management, time and attendance could become an issue.
As docking pay is impermissible, what can you do?
While you can’t legally dock pay, you can reduce vacation days or paid time-off. This can be done like-for-like, or as a percentage, depending on their circumstances. As the US government stipulates no minimum vacation days, this area of employment law is dependent on local legislation.
If you don’t already have an attendance policy in place, this is something important to have. Not only does it set expectations for employees and their company, but it can be used to provide legal backing in case of a challenge. Be reasonable with your policy and use it to promote flexibility.
Time tracking can help employees become more aware of how much they’re working. This can be used to enhance productivity, efficiency and better task and project management.
Payrolling exempt employees isn’t a problem with a robust solution in place. If salary is defined, and not dependant on hours, this can be processed normally within your payroll solution.
Where a business doesn’t have an attendance policy in place, poor time and attendance keeping can affect the accuracy and reliability of your payroll. An outsourced solution, however, removes most of this this responsibility from the employer, allowing an operation to enjoy the flexibility it needs to get the job done. Aside from supplying data directly to the outsourced payroll provider, an employer’s responsibility ends there.
Is poor time and attendance keeping affecting your payroll? Get in touch with IRIS FMP for a solution that takes the pain out of payroll, so you can invest your focus in your business.
