I have one hourly bookkeeper who makes $20 an hour, but she works so much over time that so far this year, I have compensated her approximately another $20,000. All her work is reviewed by our CFO. I have a policy forbidding overtime without a prior, written authorization, and she has been warned twice, but she ignores the warnings. Can I just designate her as exempt?
No, you cannot just designate her as exempt. To be exempt from overtime, an employee must meet two criteria: 1. the statutory minimum salary level (the highest of either the state or federal) and 2. the job duties test.
Your bookkeeper's compensation already exceeds the minimum threshold required to be considered exempt under federal law ($35,568 per year as of Jan. 01, 2020), and most likely under your state law. However, that is only part of what is necessary to designate her as exempt from overtime.
She is a bookkeeper who has all her work reviewed by your CFO, which tells me that it is unlikely she would meet any of the duty tests under the Fair Labor Standards Act. Apparently, her primary duty does not include the exercise of discretion and independent judgment with respect to matters of significance. https://www.dol.gov/whd/overtime/fs17a_overview.htm
An employee who violates an overtime policy, requiring prior, written permission before working overtime, must be paid for the overtime worked to avoid wage and hour liability; however, the violation of your policy can be treated as a disciplinary issue. Before making any decision on termination or discipline, discuss the situation with your local legal counsel to determine what responses are available to you and the potential risk.
Jack McCalmon and Leslie Zieren are attorneys with more than 50 years combined experience assisting employers in lowering their risk, including answering questions, like the one above, through the McCalmon Group's Best Practices Help Line. The Best Practice Help Line is a service of The McCalmon Group, Inc. Your organization may have access to The Best Practice Help Line or a similar service from another provider at no cost to you or at a discount. For questions about The Best Practice Help Line or what similar services are available to you via this Platform, call 888.712.7667.
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