Department of Labor Confirms Employers Can Require Exempt Employees to Track Hours Worked

Volume 5, Issue 4
April 26, 2006

The Department of Labor ("DOL") confirmed in an opinion letter that exempt employees may be required to track their hours worked without jeopardizing the salary-basis portion of their exemption from overtime under the Fair Labor Standards Act ("FLSA"). The salaried staff of the company at issue was required to submit timesheets that tracked the hours spent by employees in various "cost centers." The timesheets were used to prepare departmental budgets.

The DOL summarily concluded that the practice of submitting mandatory timesheets did not affect the employees' exempt status. "Employees who are exempt under section 13(a)(1) of the FLSA as bona fide executive, administrative, and professional employees do not lose their exempt status when they are required by their employer to track their time on an hourly basis." The DOL referenced and relied upon an earlier opinion letter on this issue which stressed that as long as the exempt employee is guaranteed no less than 1/26 of his/her annual salary each biweekly pay period (except for permissible deductions), the salary-basis test is preserved because the exempt employee's pay is not affected by the information set forth on the time sheets.

The DOL's position on this issue appropriately recognizes that employers may need to track the time of exempt employees for a variety of reasons which are unrelated to determining how much an exempt employee should be paid each pay period. These administrative or operational needs should not affect the exemption provided employers are careful to ensure that the time recording requirement does not impact the amount of pay exempt employees receive.

Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.