November 16, 2016

Camp Worker and Overtime

Question:

One of a camp’s fulltime maintenance men is paid $600 per week ($31,200 per year). Some weeks he puts in less than 40 hours. But during camping season, he easily works 60 to 70 hours a week. Is the camp required to pay him overtime?

Answer:

As a general rule, the camp is not required to pay overtime if the employee meets two requirements.
  1. The employee meets the salary test and is paid on a salary basis of at least $913 per week (or $47,476 per year),* and 
  2. The employee meets the duties test of the executive, administrative, professional, or other exemption.**
Because the maintenance man is paid $600 per week, he does not meet the salary test (No. 1 above). The camp is then required to do one of two options:
  • Option A. Increase the employee’s weekly salary, or
  • Option B. Reclassify the employee to a nonexempt employee, which means the employee will be paid on an hourly basis. 
Option A is the simplest. The camp can just increase the maintenance man’s weekly salary from $600 to $913 per week. Because the employee’s compensation would increase by $16,276 ($47,476 - $31,200), this would likely create havoc on the nonprofit’s budget.

As a result, Option B should be implemented. This means that the employee will be paid on an hourly basis. The camp should require the employee to record all his hours worked each day. As an example, the camp could pay the employee $10 per hour. If the employee works 30 hours in one week, the employee would receive gross wages of $300 ($10 X 30 hours) for that week. But if the employee works 70 hours, the employee receives time-and-a-half of $15 ($10 X 1.5) for anything more than 40 hours. Hence, the employee is paid $850 in total gross wages for the week.***

Option B would also create significant budget concerns depending on the employee’s regular hourly rate. If this is the case, the employer could limit the weekly hours of the maintenance man and hire an additional employee.

Because each employment situation varies, we suggest the camp seek appropriate legal counsel. In addition, state minimum wage and overtime laws need to be taken into consideration.

*The Department of Labor announced the final rule updating the overtime regulations on May 18, 2016, with an effective date of December 1, 2016. The DOL final rule is the result of President Obama’s executive order in 2014.
**See the DOL’s Fact Sheet #17A for more information on exemptions, although the fact sheet has not yet been updated to reflect the $913 per week salary requirement.
***$400 ($10 X 40 hours) + $450 ($15 X 30 hours) = $850

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