Q. I am an exempt employee. I record my work hours which are billed to a customer contract. Recently, a new department manager has instituted policies to reduce the amount of time charged to department overhead. These changes don’t seem right to me. For example, we are no longer paid for attending section meetings, which are held monthly and generally include lunch. These hour-long meetings are mandatory (attendance is taken) and include discussions of department policies, news, and schedules. My manager says that because the company provides a free lunch, it doesn’t have to pay us for our time at the meetings.
Also, as part of our performance development process, we are required to develop a written set of goals at the beginning of the year, update our status towards achieving those goals throughout the year, and write a detailed summary of our accomplishments at the end of the year. We have now been instructed that we will only be paid for time spent in formal performance development meetings with our managers. We have been told that because it is for our own improvement, we will not be paid for any of the time we spend composing our goals and accomplishments. However, this process, which can be involved and time-consuming, is not optional and I would be chastised and receive negative reviews if I did not complete this process.
Can you provide feedback on whether or not these are reasonable policies?
A. Communications over pay, rates of pay and especially changes in what will be paid and what will not, can cause significant issues in the work force. When communication is clear and employees are treated fairly, organizations can avoid disgruntled employees. Legal explanations have their own idiosyncrasies so we consulted a wage and hour expert.
Attorney Barry Miller, in the Labor and Employment group at Seyfarth Shaw explains, “Exempt employees are generally paid a fixed salary that includes compensation for all hours worked during each week. If properly classified as exempt, those employees need not be paid any additional compensation for attending meetings, working through lunch, or taking on additional responsibilities. This includes lunch meetings or work that might be performed outside the normal work day, such as work on a performance development plan. That an employer requires exempt employees to keep track of how their time is spent, for example in order to charge hours to a client or project, does not create any additional obligations for the employer to pay employees any type of hourly compensation.”
Non-exempt employees are typically paid on an hourly basis. Those employees must be paid for all hours in which they work (and overtime for hours over 40 per week), and “work” generally includes all efforts exerted on the employer’s behalf. Attorney Miller continues “Mandatory meetings and participation in the employer’s performance management process would, under most circumstances, be considered work. That there is also some benefit to the employee from his or her working efforts, as might be the case for work done as part of the performance review process, generally does not affect the employer’s obligations to pay for working time.
The fact that the employer provides lunch at a meeting also does not create an exception to the requirement to pay non-exempt employees for all hours worked.” Surprisingly, in certain circumstances, employers may treat the actual cost of a meal provided to an employee as part of his or her wages and deduct that amount from the cash wages in his or her paycheck.
Reasonable, fair and understandable seem to be the appropriate targets for employment issues. Is the manager giving the right answer for the right reasons? Perhaps a check with human resources can help explain.