A new manager wants to set our exempt salaried employees’ hours and breaks and have them use a time clock. Is this allowed?
Quick Answer
Yes. Under the FLSA, employers generally may require exempt employees to work a specific schedule and track their hours.
Legal Perspective
Fuller Law Group
San Diego, California
The short answer is “yes,” says employment law attorney David Monks (dmonks@fullerlawgroup.co) of Fuller Law Group P.C. in San Diego, California.
Although exempt employees are not paid by the time they work, an employer has every right to direct such employees to work certain hours in accordance with business needs. It’s quite common for the employer to require employees to work (at least) regular business hours, such as 8:00 to 5:00.
In addition, the employer can require exempt employees to clock in and out for shifts and meal breaks if there is a legitimate business-related purpose for doing so. Examples include:
- Determining hours to bill clients
- Evaluating whether the employee met billable-hour requirements
- Assessing compliance with attendance policies, and
- Measuring productivity.
As for breaks, even though no law requires an employer to provide breaks of a certain length to exempt employees, an employer may conclude that breaks are beneficial for exempt employees’ welfare and, accordingly, require that breaks be taken.
In making such a determination, the employer should consult with managers to assess the workplace culture and how employees feel about being “forced” to take breaks.
Relevant Case Law
Sander v. Light Action, Inc.
Douglas v. Argo-Tech Corp.
HR Insight
CertiK
New York, New York
I would not want to do this, says HR Leader Erin ImHof.
Some companies do this: Government contractors and others that bill other companies by the hour. But, outside of that, it just seems like an FLSA recipe for disaster.
GH Transportation
Crestline, Ohio
This is actually a good idea, says HR Manager Laina Van Buskirk.
A lot of times, salaried employees end up working through breaks. This would ensure that salaried employees get to take their breaks. As long as it does not interfere with them getting paid their salary amount promised, it should not be an issue.
Candle Warmers Etc.
West Jordan, Utah
First, I would ask the manager why he wants to do this and address any concerns he has, says HR Generalist Melissa Birch.
Second, I would refer to the policy in the company handbook. Asking employees to work specific hours and take scheduled breaks is reasonable. There is no law to having salaried employees clock in and out to track hours, but it is not acceptable to deduct pay for hours not worked.
The Cost of Noncompliance
Unpaid OT to salaried employees: Company pays out $18.3M after DOL investigation
Who was involved: Halliburton, a Houston, Texas-based provider of products and services to the energy industry, and 1,016 workers employed nationwide.
What happened: Following an investigation, the Department of Labor determined that Halliburton incorrectly categorized employees in 28 different job positions as exempt. The department said Halliburton did not pay overtime to salaried employees in those positions when they worked more than 40 hours in a workweek. It further alleged that Halliburton did not keep accurate records of hours worked.
Result: Halliburton agreed to pay nearly $18.3 million to 1,016 of its employees nationwide.
Info: Halliburton pays nearly $18.3M in overtime owed to more than 1,000 employees nationwide after DOL investigation, 9/22/15.
Misclassified employees: Wal-Mart pays $4.8M in back wages, damages — plus $463K in penalties
Who was involved: Wal-Mart Stores Inc., an Arkansas-based retailer, and more than 4,500 Wal-Mart employees.
What happened: Following an investigation, the Department of Labor determined that Wal-Mart misclassified vision center managers and asset protection coordinators as exempt employees. It determined that the employees were nonexempt and were thus entitled to overtime pay.
Result: Wal-Mart agreed to pay approximately $4.8 million in back wages and damages to more than 4,500 employees nationwide. It further agreed to pay $463,815 in civil money penalties.
Info: DOL recovers $4.83M in back wages, damages for more than 4,500 Wal-Mart workers, 5/1/12.
Yelp! agrees to pay $1.25M to exempt employees who were misclassified
Who was involved: Yelp! Inc., a San Francisco-based publisher of crowd-sourced reviews about businesses, and a class of Yelp employees.
What happened: A group of Yelp employees who sold advertisements for the company’s website alleged the company misclassified them as exempt to avoid paying them all the compensation they were due. The suit alleged the employees were improperly denied overtime pay.
Result: Yelp agreed to pay $1.25 million to settle the suit.
Info: Settlement agreement in Larkin v. Yelp! Inc., 4/27/12.
Key Takeaways
- The FLSA does not bar employers from requiring exempt employees to work a specific schedule and track their hours.
- In most cases, it is not acceptable to make deductions from exempt employees’ pay for hours not worked.
- A requirement that exempt employees clock in and out should exist only for legitimate record-keeping purposes.
- A requirement that exempt employees clock in and out should be applied equally to all exempt employees.
- Time clocks should not be used to compute pay for exempt employees.
- In all cases, employers must continue to follow any applicable state and local rules addressing the provision of meal and rest breaks.
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