What Can an Employer Do If an Exempt Employee Is Not Working 40 Hours?
Employers Expect That a Certain Amount of Time Is Invested on the Job
In an office where company policies state that exempt employees must work a 40-hour workweek, an exempt employee is not working 40 hours. The office manager understands that the company must pay an exempt employee a full salary even if they don't work a full day. How would you address this with the employee, the office manager asked?
First of all, you did a good job by asking the question and not just cutting the employee's paycheck. Many employers don't understand that you can't cut an exempt employee's paycheck if they don't put in the full 40 hours.
If the employee is 10 hours short during each pay period, that means that they have taken more than 80 hours off from work. That's two whole weeks of vacation in 4 months with no docking of their vacation or pay. The employee has the deal of the century from an organization that allows this practice to continue.
Who Is Losing Out in This Situation?
Your company is losing out. You hired the employee to do a job and they are not doing it. While it's absolutely true that you shouldn't nickel and dime your exempt employees on the number of hours they work, they also need to be working a reasonable number of hours.
This generally means that you can expect that one week the employee will work 40 hours, the next 45, the following 37. A schedule like this balances out in the end. What you have, instead, is an employee who is consistently working 35 hours and that's not what you hired them to do. So, let's fix this situation. Here's how.
Employer Alternatives If an Employee Is Not Working 40 Hours
Legally, you can dock the employee's vacation time in whatever increments you want. State law governs vacation and most states pretty much leave it up to the business. You are subject to follow your own employee handbook, so you may need to update your handbook to reflect your practices better.
However, this practice sends a bad message to employees when you dock vacation pay for exempt employees. You want your exempt employees able to leave early once in a while to go to a doctor's appointment or attend a parent-teacher conference, without giving up their vacation.
Have a Discussion With the Exempt Employee Not Working 40 Hours
A better solution is to have a sit-down discussion with the employee. The first question to ask is, why are they leaving early so often?
You may find that they are leaving early because they don't have any more work to do and so, why stick around? This is perfectly legitimate. If you're an exempt employee you are paid to do the job and if you're capable of doing 40 hours of work in 35 hours, why stick around staring at the ceiling?
If they aren't doing everything that is expected of them, however, the question becomes do they know that? You may find that it’s a problem with communicated expectations. Their knowledge of the requirements fails to line up with your expectations.
Frequently, when an employee is new to the job, you don't tell them everything that they should do and you assume that they will figure it out. If this is the case, discuss their responsibilities with them and the problem should solve itself. When they clearly understand the goals and expectations of their job, the average employee will do them.
The employee may have a personal issue that requires a lot of time. Is there a medical problem? Therapy? A child who needs care? They may hope that no one notices and is completely stressed out about it.
If that's the case, you can discuss with them a more permanent flexible schedule so as the employer, you know what to expect from them. For instance, allow them to work 10 hours Mondays and Wednesdays, and a half-day on Tuesday to take care of their situation and still work 40 hours.
With 15 employees, you're subject to the Americans with Disabilities Act (ADA) and a medical (mental or physical) situation may fall under ADA. This requires reasonable accommodations from the business.
Exempt Employee May Not Want to Work 40 Hours
The employee may want to work only 35 hours a week. You can say no. Or, you can say, “That's fine, but we'll cut your salary to match your hours.” This is perfectly legitimate—you calculated their salary based on a 40-hour workweek. If the employee is only going to work 35 hours, a pay cut is in order. The employee may decide they'd rather work 40 hours and keep the full salary.
A whole host of other issues may be going on, but the important issue is that you must make sure that your expectations match theirs. It's up to you to tell this employee that you need a change and then follow through to make sure it happens.
The Bottom Line
And keep in mind, while you can't dock an exempt employee's pay, you can fire an exempt employee for not working the required number of hours. It's the last resort, but sometimes you need to fire the employee. Someone who takes advantage of a kind boss isn't a good employee.
Suzanne Lucas is a freelance journalist specializing in Human Resources. Suzanne's work has been featured in notable publications including "Forbes," "CBS," "Business Insider," and "Yahoo."