The nature of the duties of positions classified as exempt under the Fair Labor Standards Act (FLSA) often requires employees in those positions to work more than the regular 40 hours in a week. It’s not unusual for an exempt employee to work extra hours during a week as part of a special project, to meet an important deadline or due to an unexpected change in operational needs. The FLSA doesn’t require employers to provide extra compensation or compensatory time to the exempt employee for extra hours, and up until the changes to the FLSA regulations in 2004, it was in the employer’s best interest not to provide any type of extra compensation for fear that it would jeopardize the exempt status.

The 2004 change gave employers more room to provide exempt employees extra compensation for extra time worked. The relevant regulation states that “additional compensation may be paid on any basis (e.g., flat sum, bonus payment, straight-time hourly amount, time and one-half or any other basis), and may include paid time off.” However, employers should remain cautious because a worker’s exempt status might be harder to prove if the employee is paid time-and-a-half, like a nonexempt employee. It may be safer to pay exempt employees extra compensation for extra hours worked in the form of a flat sum or straight time.

Employers also may provide extra compensation in the form of time off, or compensatory time. Employers are free to structure compensatory time policies as they wish. For example, an employer may choose to provide compensatory time to an exempt employee for time worked more than 40 hours or any work more than 45 hours in a workweek if that better fits the company’s operating needs.

It’s important to remember that exempt employees are not required to receive extra compensation or time off for extra hours worked, but the FLSA allows employers to provide extra pay or time off and still be compliant with the exempt status.

 
Please Note: This material is provided as general information and is not a substitute for legal or other professional advice. Contact the Knowledge Center for more information.
 

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