Hello,

My company was just aquired by a large company. Previously we were paid on an hourly basis. I have been told by multiple people that all Inside Sales Reps in Illinois must be paid hourly and paid for any over time (40+ hours) worked in a week.

Currently the new company has placed us on a Sallary non-exempt pay. If we work overtime we are entitled to an "overtime premium" which equates to half of our calculated hourly pay.

When the aquistion first completed we were told we would be paid on an hourly basis. However, when we received our first pay check, we all saw that we were being paid sallary and everyone was forced to sign another document saying we accepted the change AFTER it had occured.

Many individuals in my company work well over 40 hours and are "suggested" not to work over 40 hours as all overtime requires approval by management. However, there are many individuals who are working 50+ hours each week.

Should we be paid on an hourly basis? Can someone link me to some specific data which proves this is the case?

Thank you in advance!

So far as I know, there is no law that says a non-exempt employee (someone who is entitled to overtime) cannot be paid a salary.

So, you are getting a salary AND you are being paid overtime, but not at time and a half. This might be legal, if the company is using the fluctuating work week method (as I recall, you need to be told of that). The way it works, briefly, is that you get a salary that covers ALL of your hours. IF you work more than 40 hours a week, your salary is divided by the actual number of hours worked to get your hourly pay rate and the overtime hours are then paid at half of the hourly rate times the number of overtime hours. The more you work, the less your average hourly rate, but never less than minimum wage.

Not a wonderful deal, but there is a flip side to the coin. If you have no Paid Time Off (vacation, holiday, sick leave) available, the employer must still pay your salary for the week (not necessarily true for salaried, exempt employees).

Overtime, if worked, must be paid whether or not it was approved or not. If the company wants you to get approval before working the extra hours, I suggest you get it. You should still be paid if you don't, but you can also be disciplined or fired.

but there is a flip side to the coin. If you have no Paid Time Off (vacation, holiday, sick leave) available, the employer must still pay your salary for the week (not necessarily true for salaried, exempt employees).

Scott - re salaried exempt employees I thought their pay could only be docked in very limited circumstances (ie took off a full day for personal reason) & were out of PTO. Otherwise; even if out of PTO, I didn't think their salary could be docked for absences of less than a week. Are you saying a salary non-exempt employee has to have their salary for the week paid even if out of PTO & they took off a personal day for example? I thought a non-exempt employee (even salary non-exempt) could have their salary docked if off for any reason (ie personal day, sick day) & if out of PTO. Is that not correct? Is that just for a fluctuating workweek? I'm not sure what you mean is true for a salary non-exempt but not necessarily true for a salary exempt. (I don't understand the flip side of the coin.) Can you explain? I just want to have it straight in my mind. Thanks.

The flip side, Betty, is that full day absences for non-exempts being paid FWW get paid regardless of the PTO balance. Not true for exempts. That is the only positive aspect, IMO, to offset the declining value of hours worked.

The flip side, Betty, is that full day absences for non-exempts being paid FWW get paid regardless of the PTO balance. Not true for exempts. That is the only positive aspect, IMO, to offset the declining value of hours worked.

Thanks, Scott. It's due then to the FWW (re non-exempts getting pd. full salary for day off w/o any PTO) - that is what I didn't know for sure but thought it might be. Have a great day. Betty :)

There are three legal methods for paying a Non-Exempt employee on a Salaried basis (see referenced article below).
- The "normal" method (FLSA regulation 29 CFR 778.113) requires OT to be paid at 150% of RRP for all hours worked past 40 in the work week but allows docking of base hours worked. For most purposes, paying Non-Exempt employees using this method is very similar to paying Non-Exempt Hourly employees. At least 90% (maybe 99%) of all Non-Exempt employee paid by Salary use this method.
- The Flucutating Workweek method (29 CFR 778.114) described by Scott is the next most common method, although this method is rarely used. It uses a rather strange 50% RRP method for OT hours worked, but has docking restrictions on based salary (this is a formal trade off is implicit in this method).
- The Belo Plan method is a variant of the FWW method, and is almost never used, and has even stronger restrictions in it's use then the FWW method. This method was created when the federal DOL lost a court case to the Belo company many years ago. The related DOL regulations were in response to that case, and are arguably made very restrictive because DOL never wanted these rules in the first place.

FWW and Belo are not something causually implemented and should never be used at all unless the employee knows these rules are in place. Whenever an Non-Exempt employee is paid on a Salaried basis, it should be via the "normal" method until and unless the employer both informs the employee that one of the other methods is in use and the employer follows the related rules.


http://payroll-taxes.com/articles/salaryAlternatives.html

Just to add about the "normal" non-exempt salary method. It's based around a fixed work week. That means that while you are free to cut pay pro rata if hour worked are below the fixed week, you likewise need to pay for hours worked above the work week.