HR Management & Compliance

Exempt Employees: Can We Make Exempts Punch a Clock?

We’re a little unsure about what we can require of our exempt employees without risking their exemptions. Can we make them punch a time clock or track their hours? We tried the time clock approach, but they resented it. They said we’re treating them like hourly workers. Also, can we make them work a minimum of eight hours a day? Can we make them work more than eight hours a day? — Merrylee, HR Manager in Bakersfield

The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.

The answer to all of these questions is yes.

Over the last two years, the Wage/Hour Division of the U.S. Department of Labor (DOL) has addressed these very issues in a series of opinion letters. The letters can be found on the DOL website (Wage/Hour Division) and are numbered as follows: FLSA 2004-4NA, FLSA 2005-5, and FLSA 2006-6.

The teaching of these letters is that as long as no deductions are made from the salary as a result of these timekeeping and minimum hour practices, an employer is free to implement these types of policies. Making such deductions would violate the salary basis test and thus destroy the overtime exemption.

In its 2006 letter, the Wage/Hour Division approved a company requiring its exempt employees to work either 45 or, if they’re officers of the company, 50 hours a week.

In the 2004 letter, the Wage/Hour Division permitted an employer to require exempt employees to clock in on their computers when they arrive in the morning and to clock in and out during the day, except for morning and afternoon 15-minute breaks. Employees were required to keep an accurate time sheet showing how much time they actually worked each day. In approving theses policies, the Division in the 2005 and 2006 letters cited the preamble of the 2004 revisions to the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, noting the statement, “an employer may require an exempt employee to do things, such as to record and track hours and to work a specified schedule without affecting the employee’s exempt status.” Again, the point here is that as long as the basic requirements for qualifying for exempt status are met, these practices are legal.

Although it is legal to impose timekeeping requirements on exempt employees and to make them work a schedule that may include more than eight hours in a day or 40 hours in a week, Merrylee’s question noted the morale issues when these types of requirements are imposed on exempt employees. However, there are a number of perfectly legitimate business reasons for exempt employees to be required to keep track of their time (e.g., budget control and allocation reasons or assigning time to individual contracts or customers), and it is also perfectly reasonable to require exempt employees to work specified schedules so that they are available when customers and/or other employees need access to them. Explaining your specific rationale to your employees might help with some of the morale problems.

Finally, it is perfectly acceptable to impose discipline on exempt employees who do not keep time records and/or who do not follow the schedules set for them, as long as the discipline does not involve docking of salary.

Lloyd W. Aubry, Jr., Esq., former California labor commissioner, is of counsel at the San Francisco office of law firm Morrison & Foerster.