Under federal law, an exempt employee does not qualify for overtime if she works more than 40 hours per week. The absence of overtime pay can be viewed as a disadvantage of being exempt; however, there are many benefits to being classified as exempt. Most exempt employees are paid a salary, and must receive at least the minimum salary in addition to other benefits.
Full Salary Payment
The Fair Labor Standards Act, or FLSA, decides whether an employee is exempt from its overtime pay provisions. As of the time of publication, an exempt employee must receive no less than $455 per week; some states require a higher minimum salary, in which case the greater amount applies. An exempt employee must normally receive his full salary regardless of days or hours worked, and regardless of the quality or quantity of work performed. While your employer may reduce your salary to match your work schedule, it cannot pay you less than the minimum salary requirement of $455 per week. Note that reducing salary to match hours worked might be interpreted as paying you according to hours worked, which can result in your employer losing the exemption. In general, as an exempt employee, you can count on receiving a set amount of pay each payday.
No Partial Deductions
Though nonexempt employees qualify for overtime, they are also generally paid according to hours worked. Therefore, if a nonexempt employee takes a half-day off and does not have a benefit day to cover the time, his employer does not have to pay him for those hours. As an exempt employee, you must receive a full day’s pay if you take a partial day off. For example, if you take two and half days of unpaid time off, your employer deducts only two days’ pay from your salary.
The FLSA and some states limit the type of deductions an employer can make from an exempt employee’s pay. Specifically, your employer may deduct from your salary only if the deduction is permissible. You are usually not entitled to any salary for weeks in which you perform no work. Further, provided you do some work during the work period, your salary typically may not be reduced due to the quality or quantity of work you perform. However, exceptions may apply. For example, your salary cannot be reduced if your employer has no work for you to do, such as during a slow period.
Salary may be docked in full-day increments for unpaid disciplinary suspensions, penalties charged because you violated a major safety policy, to offset payments for jury or witness duty or temporary military duty pay, for unpaid leave taken under the Family Medical Leave Act and if you take benefit days, such as sick days, after exhausting your available time. If your employer makes improper deductions from your pay, it can lose the exemption and may be required to pay you as nonexempt, which qualifies you for overtime.
The FLSA does not forbid an employer from requiring exempt employees to punch a time clock. Though the employer can request it, many choose not to, since exempt employees are normally paid the same amount of salary each payday. Unlike hourly employees, who are usually required to use a timekeeping system, as an exempt employee, you likely do not have to spend time clocking in and out.