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Am I an Hourly or Salaried Employee?

Expert Advice March 18, 2013

Question: I need some advice about my new employment with this company. During my second interview with them, they offered me a yearly salary. I accepted their offer and started working. All of the paperwork that I’ve signed had stated that I would make a certain salary yearly.

After working at the new company for a month, my new employer was purchased by a leading retailer. We were told that the company would function as a wholesale distributor for the retailer. I received a welcoming letter from the management team and to my surprise I found that they addressed me as an hourly employee. I found this baffling for several reasons. Initially, I was offered a salary position and now I’m being classified as an hourly employee. While my compensation was termed as “annual”, and I didn’t need to fill in a time sheet or “punch” in or out. Even in my previous job, I had received a salary and not an hourly wage; so I assumed there was a mistake and met the individual who had offered me the position about six weeks earlier. I was able to explain my concerns to him and he mentioned that he would look into the issue and get back to me shortly.

When I reminded him about it, a week later; he stated that according to a federal law, salary compensation could only be paid to certain positions and I did not meet the requirements; specifically, the amount of staff members I directly supervise. Is this really stated in the federal law?

Answer: Your employer is correct; there is a federal law known as the Fair Labor Standard Act that does require certain jobs to be either exempt or non-exempt from the law. There are several tests, which helps determine a job’s exemption from the law. The Department of Labor’s website will provide additional information. Since I do not know the specifics of your job description, I have to say that it is possible that your position is classified as non-exempt.

You could easily view this new classification in a negative way, but I feel you should not ignore some of the positive aspects. For instances, if you are required to work over forty hours a week, then you will receive time in a half. If the company requires you to come in during holidays or weekends after you have worked forty hours, you will receive double time in a half.

With that being said, I recommend you to discuss things over with your Human Resource Department to get their explanation on why your job has been classified as non-exempt. This will give you an opportunity to understand the rationale behind the new classification, whether or not you agree with it. Importantly, you should note that the company has to pay you a competitive rate regardless of whether or not your status has changed under the federal law. So, make sure the company is paying you a competitive rate for your position even if they have decided to change your status.

EducationCareerArticles Team

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