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Paying non-exempt employees: Do you know the rules?


Let’s say you are sending Ken, one of your top performers, to a training seminar that’s eight hours away. Since he’s a non-exempt employee, he will be paid an additional 16 hours of pay for his travel time. Or will he?

Though the Federal Labor Standards Act (FLSA) does not require rest and/or lunch breaks, many states do require that employers provide employees with rest and/or lunch breaks after a certain number of hours worked.

Carol, a non-exempt employee, regularly eats lunch at her desk while she’s working. She goes to HR and files a complaint that she should be getting paid for that half hour. Is she right?

When and how to pay non-exempt employees for training, travel time, overtime and on-call time can be confusing. And the possible penalties for being out of compliance with FLSA regulations can run the gamut from complaints to costly lawsuits.

Here are four scenarios covered under the FLSA guidelines and recommendations on how to enforce them.

1. On-call time

Generally, there are two factors to consider when deciphering if someone gets paid when they’re on-call – if they’re engaged to wait or waiting to be engaged.

If Mike is required to stay at the office waiting for a sales call he is engaged to wait. He’s actively working and getting paid.

On the other hand, if Joe normally works shifts Monday through Friday in the office, but twice a month he’s scheduled to be on-call on an “as needed” basis on weekends where he is not required to report to the office, he may not be paid—unless he’s actually called into work – he’s waiting to be engaged.

2. Training

If employees go to a lecture, meeting or training program, you’re not required to pay them if all of the following four criteria are met:

  • They’re attending training outside of their normal working hours
  • It’s voluntary
  • It’s not job related
  • No work is being performed while they are at training

When Jon, a computer programmer, decides to attend a night class on how to write a novel — since it is out of his scope of work, after hours, voluntary, and he is not working during the class, he is not entitled to hourly pay for time he spends in class.

3. Travel

When your employees travel, there are several factors to consider when determining whether they’re eligible for pay. It depends on the type of travel involved. Here are some scenarios:

  • Home-to-work travel – ordinary commute from work to home is not paid.
  • Home to work on a special assignment – if an employee is given a special work assignment in another city and returns home the same day, then their time traveling to and from is paid.
  • Travel that’s all in a day’s work – employees who travel as part of their primary work responsibilities, such as travel from job site to job site during the workday, are paid for that time.
  • Travel away from home community – if an employee travels away from home overnight to conduct business they are compensated for travel time only if they travel during their normal working hours.

Think of Sheryl, your typical salesperson; her job is to travel and meet with clients. Her travel time is counted as hours worked because it’s part of her main job duties.

Likewise, if Sheryl has a special workday assignment and she travels outside her normal commute to visit a client her travel time would be paid.

But, if Sheryl travels after her normal working hours to attend a conference unrelated to her job, regardless of the days of the week, and no work is being performed during her travel time, it’s not considered compensable time.

4. Overtime

Non-exempt employees must receive overtime pay. In certain states, employees may be eligible for overtime pay when they work more than eight hours in one day. But, generally, most non-exempt employees must be paid overtime pay only after they work more than 40 hours in a workweek.

Total overtime pay must equal at a minimum of 1½ times their regular pay, with no limit on the number of hours they can work in one week. If Joe makes $10 an hour and he works overtime, he will be paid at a rate of $15 an hour for overtime. The FLSA does not require overtime pay for work done on weekends, holidays, or regular days of rest, unless overtime is worked on those days.

How to track non-exempt employees work hours

So now that you know the rules, how do you track employees’ work hours while they’re away from the office? Do you monitor their whereabouts? Or, do you trust that they’ll report their hours honestly?

Some employers use things like GPS tracking or hour-by-hour reports to monitor their non-exempt employees. While this solution might appear to be the easiest, most proficient way to track employees and enforce your scheduling policies, it can also backfire.

It can send the message that you don’t trust them to do their jobs. This undercurrent of mistrust can seep into all areas of your business and wreak havoc on your business.

So how do you manage your employees’ time and maintain a healthy culture? It’s all about communication, accountability and trust.

Here are some ways to foster positive accountability:

  • When you send an employee to training it’s important to communicate your expectations well in advance. Let them know that you’re sending them because you value them and are investing in building their skills and expertise. This creates a positive atmosphere of accountability and makes the employee feel appreciated and respected.
  • Communicate your travel policy clearly and ahead of time so that your employees aren’t distracted during their trip by having to worry about how they’re spending their time, or how long they’re at lunch. This gives them the best opportunity to focus on the reason they’re there.
  • Request that your employees present what they learned to the rest of their team when they return from a training or seminar. This supports the message that they’re there to learn and reinforces trust and accountability.
  • Be mindful of how your lack of planning impacts your on-call employees. Take the time to determine your peak days and hours so that you can schedule your on-call employees to work when they will most likely be needed. Plan your schedule a month in advance to give them ample notice of when they are most likely to be called in. This lets them know that you value them and respect their time.
  • Manage and/or reduce overtime pay by coaching your employees on how to maximize productivity during their scheduled working hours. Offering courses on time management and making sure your employees are properly trained to do their jobs can reduce overtime costs.

Avoid potential pitfalls related to non-exempt pay by preparing in advance. Consider these tips:

  • Offer training for your supervisors on FLSA and related state law and how they apply to your business
  • Communicate your company’s policies on overtime, training and travel compensation by holding team meetings and encouraging feedback
  • Make sure your employee handbook is up to date and includes your scheduling policies
  • Be consistent with how you enforce your policies

When it comes to managing travel, training, on-call and overtime pay, applying the rules through open, consistent communication and respect will keep you in compliance and safeguard your business while enabling you to create a culture where your employees and your business can thrive.

Are you up to speed on labor and employment law and how it could impact your business? Learn more about current laws and how to stay in compliance by downloading our free e-book, Employment law: Are you putting your business at risk?