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Paying exempt employee for p/t work

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  • Paying exempt employee for p/t work

    This is complicated but I'll try to make it simple.

    Our CEO would like to find a legal way to pay an exempt employee an hourly rate for doing a job separate from what the exempt duties are. To clarify, the exempt employee works in Dept A. There is an opportunity to work in Dept. B a few hours a week, and the employee wants to take that opportunity.

    I advised our CEO that we cannot pay an exempt employee on an hourly basis, period, regardless of what duties the employee will be performing; in essence, our employee cannot "moonlight" with us. The CEO responded that there must be some creative way to do this, possibly treat the p/t earnings as a bonus pay, etc.

    My question: how can I explain to him, concretely, why this could not and should not be done, using CA labor law to support my opinion?

    Any feedback will be appreciated!

  • #2
    Forgot to make it clear that we are in California!


    • #3
      Of course, you CAN pay an exempt employee extra pay for doing nonexempt work outside his normal work day; there is no law prohibiting. However, you must be very careful that the amount of nonexempt work doesn't become primary and jeopardize the exempt status altogether. How many hours a week are we talking about?
      I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


      • #4
        I might add, there is nothing to get "creative" about as far as California Labor Law is concerned. Maybe you are concerned with how your payroll system will handle it. Your system may not have the capability to add hours and apply an hourly rate of pay to a salaried exempt employee's pay. If that is the case, you may have to work with accounting and payroll to ensure that they have a way within your system to charge the appropriate accounts while paying the employee the correct amount. It may require manual entries.
        Please post questions on the forum rather than sending me a private message or email. That way others who have similar issues have access to the discussion.


        • #5
          The payroll issue is a good one; I've spoken with our controller (who supevises the payroll function) and he has not indicated that it's impossible. I infer that it would be somewhat of a pain, i.e. manual entries, but not impossible.

          We're talking 4-8 hours per week, and I'm glad you stated that the real issue is whether or not the non-exempt begins to supercede the exempt duties. If that's really the primary concern then I think we'll be fine. I'm a little worried about precedent, as we don't want to open the floodgates for all exempt employees to consider p/t work, but that's a much smaller issue than my concern about jeopardizing exempt status.

          Thanks for your help!


          • #6
            Also to be clear, no Exempt employees does 100% Exempt duties. You basically (as far as the government is concerned) are creating a new job with additional non-exempt duties. Sort of like a balance beam. If the original Exempt classification was marginal to begin with, the additional non-exempt duties could make the employee 100% non-exempt for all purposes. Past that, CA has different Exempt classification rules then the feds do, so it would not hurt to be very clear exactly which CA Exempt classification you are using, and exactly what the rules are for that classification.

            It is not uncommon for employers to treat Exempt like being vaccinated against paid overtime. If an employee is Exempt once, then these employers reason that the employee will be forever Exempt. Not legally true of course.
            "Reality is that which, when you stop believing in it, doesn't go away".
            Philip K. **** (1928-1982)