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What Are the Pros and Cons of a Salaried Position?

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Question: What are the pros and cons for a salaried position? It seems to me that it is in the best interest of the company to have someone in a salaried position, and not the employee. Is it customary for the employer to offer more time to be used as personal/sick days besides their vacation days?

Answer: Unfortunately, you can’t just “make” an employee salaried – that is determined by the rules established by the Department of Labor and set forth under the Fair Labor
Standards Act.

There are a variety of factors that go into determining who is exempt or non-exempt from overtime.

Typically, management positions are exempt and sales have their own special category. Administrative are primarily non-exempt (meaning hourly), but that can vary in small companies dependent on the degree of control the positions have over their own work, and if they also manage others. You cannot simply change a title and have that employee become hourly or salaried. The Department of Labor frowns upon that and you could subject yourself to hefty fines and other civil penalties.

The Fair Labor Standards Act (FLSA) does not, however, require severance pay, sick leave, vacations, or holidays. Those are a matter of agreement between you and your employees. I do think it is customary to offer both vacation and sick leave, and in the current environment employees have come to expect good benefits and leave policies from their employers, and as such stay longer and are far more productive.

Your employee handbooks should not go into detail about what is exempt or nonexempt from overtime. You should familiarize yourself with the overtime rules and proceed as such without having to detail any of it for your employees. Your policies can cover overtime and your rules regarding time worked, however, particularly if you want or need to keep your overtime at your company in check.

This response is intended for general informational purposes only and should not be construed as legal advice or a legal opinion, nor is this column a substitute for formal legal assistance.

Hilary Atkins

Posted In: Legal, Management

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