Our company’s business hours are from 8 a.m. to 5 p.m., Monday through Friday. The payroll manager, who is classified as an exempt employee, often arrives at work around 10 a.m. and regularly leaves the office before we close. When this has been discussed with her, she tells us she is exempt and can set her own hours. Is that true?
No, your payroll manager’s status as an exempt employee does not entitle her to set her own hours and to declare that she may come and go as she pleases. As her employer, you may establish a work schedule for her and require her to abide by it.
Exempt/Nonexempt Employees
Both California and federal law require that employees be paid overtime when they work hours beyond their regular schedules. California law also requires employers to provide meal and rest breaks to nonexempt employees.
To be considered exempt from the overtime pay requirements, employees must meet specific salary and duties tests. The most common “white-collar exemptions” generally refer to an executive, administrative or professional employee. Certain salespeople and computer professionals also may be classified as exempt in California.
Properly classified exempt employees don’t receive overtime pay and aren’t obligated to take meal or rest breaks on a set schedule. Exempt employees often are expected to work longer hours, such as nights and weekends. Their employer may allow exempt employees some flexibility because of the higher demands of their jobs.
Exempt status, however, does not mean that exempt employees are free to ignore work requirements and disregard the established business hours of their companies or the work schedules set by their employers.
Schedules, Hours, Employer Expectations
Classifying workers as exempt does not remove a company’s right and discretion to impose structure, rules and employee schedules in the furtherance of its business interests.
It is reasonable for an employer to align the work hours of its exempt employees with business operations. It is certainly in a company’s best interests, for example, that its exempt managers are present and available to supervise and guide the staff they manage during the work hours of those nonexempt staff members.
There are sound business reasons for a company to require exempt employees to work regular schedules. Exempt employees frequently are critical to the day-to-day operations of the business. In addition, they often are looked to as “leaders” within the company and are expected to set examples for nonexempt employees.
An exempt manager’s view that she is not required to adhere to the regular work schedule of the company is likely to result in resentment and lowered morale.
Unpredictable Attendance May Be Disciplinary Issue
It is critical for a company to recognize that the payroll manager here, who believes she is entitled by her status to set her own work hours, presents them with a discipline issue. It is not a pay deduction issue.
The fact that her self-imposed light schedule results in her working fewer than 40 hours in a week or less than eight hours in a day is not relevant. She is entitled to be paid her regular salary as an exempt employee.
An employer should never link an exempt employee’s salary to the number of hours the employee works in a week. By dealing with attitude and attendance issues as a pay issue, the company jeopardizes the employee’s exempt status and risks transforming her into a nonexempt employee.
Because unpredictable, unreliable attendance is not a feature of an exempt employee’s status, this employer can discipline the payroll manager for missing work.
Sharon Novak, Employment Law Expert, CalChamber
CalChamber members can read more about Determining Exempt or Nonexempt Employee Status in the HR Library. Not a member? Learn how to power your business with a CalChamber membership.
