Shop Talk: Practical answers for tough business questions.
Question: I have an employee who wants to work more hours, and I need more help, but I can’t afford to pay overtime. Can I put her on salary and let her work extra hours each week?
Answer: The short answer is “not legally” unless there are other factors you haven’t stated in your question. You can put her on a salary, but that doesn’t automatically make her exempt from overtime wages. Federal law says unless a worker is “exempt,” you have to pay overtime at one-and-a-half times the employee’s regular rate of pay for any hours over 40 in a given week.
In some cases, an employer can offer overtime in the form of “comp time,” in which they grant time off to the employee for any extra hours, but that compensation also has to be calculated at the 150-percent-of-wages rate.
According to the Fair Labor Standards Act (FLSA), in order to be defined as an exempt employee, he or she would have to meet very strict guidelines for both pay scale and the type of work being performed, usually related to being a supervisor, key decision maker, or highly skilled professional in specific fields. (For more information, visit www.dol.gov/whd).
This can be a tricky area so, before you decide to do anything, it is best to check with your attorney and/or accountant. The last thing you want is to be fined or charged penalties on top of payroll costs.
If you need additional sales help, I suggest hiring someone else on a part-time basis. That way, you stay within the federal legal guidelines and you also have a back-up person to call in case of absence or illness.
First published in Vol. 26 No. 2 of Retailing Insight. © 2012 Continuity Publishing Inc. All rights reserved.