"Salaried, Non-Exempt:" When Hourly Rate is "Flexible"

First the important news: I am "micro-blogging" on Twitter. Follow my feed and see me struggle to limit my comments to 140 characters :-)

The question of "salaried, non-exempt" jobs came up again in my inbox (I have changed a few details to make the email not personally identifiable):

My classification was Salary Non-Exempt, and I am being told that I will not receive time and one half pay for these hours, such as a Non-Exempt employee would have, but only "Half Time" due to the Salary Non-Exempt classification.

Half Time is calculated by taking the weekly salary amount ($800.00) and dividing it by 40 hours in the work week; which equals $20.00 per hour. For any time worked over the 40 (example: 10 hours worked over 40 in a week for a total of 50 hours) and dividing it into the normal salary amount of $800.00, giving $16.00 per hour, then dividing the $16.00 by half resulting in $8.00 per hour for any hour worked over 40, or "Half Time" versus the traditional time and one half, in this example $30.00/hour for time and one half.

Is this accurate? Legal? Do I have any recourse? I answered the phone and supervised no one, swept the floors and cleaned the toilets. Is Salary Non-Exempt even accurate and should I consider a separate complaint to correct it to Non-Exempt?

When I first read this, I thought paying only $8/hour for overtime had to be illegal under federal Fair Labor Standards Act (FLSA) regulations.

However, I was wrong: the above pay is legal under federal law. In this post, as previously promised, I will address how salary, non-exempt, pay works.

Wondering if you should be earning $20/hour for answering phones and cleaning toilets? Use the PayScale Salary Calculator to find out.

Key Determinant of Pay: Location, Location, Location

Companies frequently employ workers all across the nation, but how do they decide what to pay their workers located in different regions? Should they focus on a set of fixed geographical pay offsets? In other words, if pay for a Software Developer is 30% higher in New York than Chicago, should the same pay difference exist for Financial Analysts? The answer is a resounding "no!"

By using fixed geographical pay offsets, a company will fail to reflect the true variations in labor markets for employees by region. For example, the typical Higher Education Administrator in Chicago earns a pay ~24% less than one in New York, while a typical Urban Planner in Chicago earns ~30% more.

In this blog, I will show this extreme variation in pay exists across numerous jobs and locations. The results highlight the key reasons why fixed geographical pay offsets across all jobs simply do not make sense.

Does the location of your job lead to higher pay? Use the free PayScale Salary Survey to find out.