Feeling confident that you pay employees properly? Here are five tricky wage and hour questions that may trip you up.

Question #1: One of your hourly employees needs Friday off next week to get his wisdom teeth pulled but he doesn’t have any vacation or sick time left. In order to avoid losing pay, he offers to work an extra eight hours this week (in addition to his 40 regular hours) to make up for next week’s lost time. Is that OK?

Answer: You’ll have to pay the employee overtime pay for any time worked this week in excess of 40 hours. Private employers are not allowed to “carry over” hours from one week to the next or offer compensatory time across workweeks. Each workweek must stand on its own when calculating overtime pay. It doesn’t matter that the employee requested or agreed to the arrangement. You still have the overtime pay obligation.  Of course, you are not required to pay the employee for the time he misses next week.

Question #2: All of your employees have access to the company’s email and instant messaging system on their mobile devices. You are concerned that certain non-exempt employees may be reading and answering work emails and messages “off the clock.” To avoid potential liability for that unpaid work time, you decide to pay everyone a salary at a rate that exceeds the salary threshold for the FLSA white collar exemptions. That should eliminate the risk of wage claims, right?

Answer: Probably not. You may pay employees a salary but you will still be obligated to track their time and overtime pay for hours worked in excess of 40 hours per week unless they meet the requirements of a recognized exemption. Specifically, in addition to meeting the salary threshold, exempt workers must be paid on a salary basis and meet certain duties tests.

Being paid on a salary basis means not only that the worker is paid a predetermined salary but also that the fixed salary amount cannot be reduced due to variations in the quality or quantity of work performed. Unless certain exceptions apply, exempt employees must be paid their full salary for any week in which any work is performed, regardless of the number of days or hours worked. That is a significant change for workers you have previously treated as hourly.

In addition, workers must perform duties that meet one or more of the exemption tests. For example, to meet the administrative exemption, the employee must have the primary duty of performing office or non-manual work directly related to the management or general business operations of the company or its customers, and must exercise discretion and independent judgment with respect to matters of significance. Most front-line employees or production workers will not meet any of the white collar exemption duties tests.

In short, simply paying employees a salary will not make them exempt unless they meet the other exemption requirements. You need to evaluate each position separately before concluding it meets an exemption. A better solution to your concern about “off-the-clock” work may be to establish a mechanism to record such work time, or to take away the ability for hourly workers to check emails and messages after hours.

Question #3: You pay straight time (i.e., not time-and-one-half) for hours worked on weekends or holidays. Does that violate wage laws?

Answer: Generally no, unless your state or municipal law requires premium pay at such times. Federal law does not require that you pay a premium for time worked on weekends or holidays. You must, of course, pay an overtime premium for hours worked over 40 hours in each workweek, but if the weekend or holiday work does not push the employee over the 40-hour-per-week threshold, straight time pay is acceptable.

Question #4: You have a policy in your employee handbook that states that any overtime must be approved by a supervisor in advance or the time will not be paid. Is that legal?

Answer: This one trips up a lot of employers. No, you may not withhold pay for time actually worked just because it was not approved in advance. If the employee does not follow your policy, you need to treat it as a discipline problem. But you may not refuse to pay the employee for that work time.

Question #5: In order to increase the diversity of your workforce, the CEO at your company wants to institute an unwritten policy that employees with a diverse background be paid 10% higher than non-diverse employees. While you agree with the CEO’s goals of increasing diversity, you are unsure about the pay premium. Are there any legal concerns with the CEO’s approach?

Answer: This unwritten policy raises potential discrimination concerns. If the policy results in some employees in a certain job category being paid less than other employees in the same job category, you risk disparate treatment claims to the extent that those being paid less can assert that the reason for the different pay is because of their race, national origin, religion, gender, or other protected characteristic. In addition, if the policy causes members of a protected category to be adversely impacted (e.g., lower bonuses, fewer advancement opportunities, etc.), it may give rise to a disparate impact claim.

In addition, the federal Equal Pay Act (EPA) prohibits paying lower wages to employees of one sex than are paid to those of the opposite sex for equal work. Depending on how the policy impacts employees along gender lines, it also could trigger gender-based claims under the EPA. Although the CEO’s intentions are good, the proposed policy change could result in liability for the company.

Conclusion

Unique employment situations can give rise to many tricky pay scenarios. You’ll stay out of trouble if you know the rules, have compliant payroll practices, and conduct periodic internal wage and hour audits. And of course, when in doubt, consult with competent employment counsel.