We have an exempt worker
who is going to reduce her hours by half for personal reasons, with our
consent. She currently makes $48,000 a year, and we agreed to just cut that in
half. Other employees will take over parts of her tasks. She will lose her
health benefits. But how do we deal with vacation, sick time, etc.? Should we
just cut those in half, too? And, can she still be exempt even if she’s part
time?
– Douglas R. in
Paying Overtime: 10 Key Exemption Concepts
Only one thing really matters in the determination as to whether or not an employee is exempt: The duties the employee performs. Learn how to avoid costly, preventable mistakes with our free White Paper, Paying Overtime: 10 Key Exemption Concepts.
Under California wage
and hour law, an exempt employee must earn a salary equivalent to two times the
minimum wage, which at $6.75 an hour is $13.50, or $28,080 per year (although
this will go up with the new minimum wage increase, discussed in our cover
story). Because half of $48,000 is $24,000, this employee would not make the
requisite salary to qualify for exempt status in
to overtime. Keep in mind that exempt status can’t be prorated, and an
employee, whether part or full time, must earn the minimum exempt salary.
But assume that the
employee earns $70,000 as a full timer. Half of that salary would be $35,000, which
is enough for a part-timer to qualify for exempt status in
As for exempt workers in
general, whether part time or full time, keep in mind that they must not only
meet the above salary requirement but must also have the requisite authority or
responsibility. For example, to qualify for the managerial exemption, an
employee must manage all or part of a business; direct the work of at least two
other employees; have authority to hire and fire; regularly exercise discretion
and independent judgment; and devote more than 50 percent of his or her time to
such exempt duties.
Finally, with respect to
prorating vacation and sick time, these are voluntary benefits an employer doesn’t
have to provide. Thus, how you treat them for part-time employees is up to you.
You can prorate benefits in the manner you suggest, assuming you apply your
policy consistently for similarly situated employees, to avoid the suggestion of
bias. Note that in transitioning the employee to part time, you cannot strip
her of any paid time off that has already accrued.