Please forgive my long write-up ahead of time.

I am an office manager for a small privately owned company located in Texas. The employees directly under my coordination previously were working under an illegal system of payment. This system was put into place by the president of the company and agreed upon by the employees it affected. Basically the agreement was verbal and stated that overtime (40+ hrs) was only to be paid if said 40+hrs were accrued on a billable job. This was necessary because the president claimed that for them to be paid 40hrs a week guaranteed they have to show up and "hang out" at the office from 8-5 if there are no billable jobs to send them on. So on the previous agreement they may show up from Mon-Thurs. go out on a billable job on Friday work 12hrs a day through Sunday but only be paid a flat rate at 68 hours. (32 hrs Mon-Thurs, 36 billable). Now since the billable wasn't over 40 they would not be paid overtime.

This issue was brought to the president eventually and he learned that while agreed upon and accepted initially it was illegal and therefore a change needed to be made. The solution was made and this group of employees was put on a salary payment system. Now as you can see this wasn't a favorable decision for them because on any given week they could work up to 84hrs (and they have) yet only be paid at 40hrs. No matter how unfair it remains perfectly legal. The problem we have ran into now however, is that they tend to leave early a couple hours a few days a week. Now the president (who does the payroll) has began to dock them the hours they leave.

My understanding is after reading through many posts on this forum is that:

If they're exempt: They must be paid for personal time off without deduction unless the time off equals to one day or consecutive days.

If they're considered non-exempt: They must be paid for the overtime but can be docked for the time off.

Is this correct? It has been brought to my attention because obviously the company is trying to "have its cake and eat it to" (direct quote)

Again thank you for any responses this site has already helped tremendously. I am trying to play the role of mediator here taking care of my duties to both parties in the process.

Texas law does not define exempt or salary-exempt employment. Texas law does not require overtime payment for anyone. These are functions of the federal wage and hour law, the Fair Labor Standards Act. (FLSA)

The FLSA requires overtime payments for most jobs, if the employer is covered by FLSA provisions. While that can be complex, generally speaking, it applies to all employers who deal in interstate commerce, OR who do more than $500K in annual revenue. That's a pretty low threshhold.

The FLSA generally requires 1.5 X normal pay for all hours worked in excess of 40 hours in a workweek. If an employee is exempt from this requirement, no pay in excess of their agreed salary is required, regardless of how many hours are worked (or how few, but that doesn't happen much).

I'm gonna leave it to the payroll experts to advise on exempt/non-exempt determinations, but my experience is that many of those employees paid a salary to limit overtime costs are not actually exempt from FLSA requirements.

Employers who "have their cake and eat it, too" sometimes choke on it.

What do these employees in question do? Not job title, but what they actually do on a daily basis.

They inspect welds, metal thickness, many things having to do with marine compliance on offshore vessels. We do work in a few states on the Gulf Coast. When there is no work as stated above they are expected to report to work and sit for 8 hours. If they leave for anything deemed not-worthy they are docked. They also still have vacation and sick leave that is used as needed.

Probably Non-Exempt, but let's be sure. I am going to include a pointer to the so-called White Collar exceptions. Look up the Professional exception and see if these worker's qualify. An inspector whose job requires several degrees and professional credentials is different then someone who checks to see if all five buttons were properly attached to the shirt. I am not sure just how technical your inspector's backgrounds need to be.

White Collar exceptions (http://www.dol.gov/esa/regs/compliance/whd/fairpay/main.htm)

Do either of these sections apply?

http://www.dol.gov/dol/allcfr/ESA/Title_29/Part_783/toc.htm

http://www.dol.gov/dol/allcfr/ESA/Title_29/Part_784/toc.htm

Do either of these sections apply?

http://www.dol.gov/dol/allcfr/ESA/Title_29/Part_783/toc.htm

http://www.dol.gov/dol/allcfr/ESA/Title_29/Part_784/toc.htm

Probably not because while they work offshore they also on occasion work in oil refineries on land as well. They do not have degrees, but do have to complete so much OJT (on job training) and then have to be certified by the ASNT (http://www.asnt.org) after taking written and practical exams.


Just to give some background, for whatever reason a lot of the jobs we have seem to get called out on the weekend or close to it. That is why the original agreement was put into place which only allowed OT if they went over 40 on a billable job. Hence it prevented them from "sitting in the office doing nothing" all week then getting overtime on the weekend. IE: it was cutting into the company's profits.

Once that was brought up publicly to be an illegal practice the decision to go on salary was the next best thing from a company overhead standpoint.

My educated guess is that they would be nonexempt. "Salaried" is merely a pay method. It does not allow them to not pay overtime, although there are a couple ways of calculating it, depending on whether the fluctuating workweek method is (properly) used or there is a Belo-type arrangement. They can always file a claim with the TWC for unpaid overtime and let them sort it out with the employer.

Ok thanks again for the help I know now how to proceed.