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February 6, 2009
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After voluntarily surrendering his nearly $10-million yearly salary because of poor company performance, Starbucks CEO Howard Schultz is now earning less than one-percent of that, or $10,000 annually. Unfortunately, under the Fair Labor Standards Act (FLSA), that means that Schultzie is no longer an exempt employee and must start punching the time clock.
Let's look at what the FLSA says about exempt and non-exempt employees. First, the difference: Exempt employees are generally paid a salary and are not subject to overtime rules; non-exempt employees are paid hourly with overtime coming after 40 hours each week (though some states, like California, start the overtime clock ticking after eight hours each day).
However, just being paid a salary does not automatically make someone exempt. There are also "white-collar duties tests," and here Schultz would qualify as an executive.
Now, and here comes the crucial part, to be exempt an employee must pass an earnings test by being paid $455 a week minimum. Let's see, $10,000 divided by 52 weeks comes out to about $192.30 each paycheck.
Busted! Get that man a time clock.
To stay current with all these laws and regulations, I rely on Personnel Concepts. This particular information came from PC's handy HR Desk Reference.
