Veterinary employees: Exempt or non-exempt? That is the question!

Moving top-performing employees from hourly to salaried positions isn't always a win-win situation.
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Jan 01, 2014

Fair wage questions involving key employees are common in veterinary practices. Employees often plead to make the move from an hourly position to a salaried one believing it will increase their wages, give them more flexible hours and eliminate the practice's need to pay out overtime. Practice owners or practice managers may unwittingly make this transition for the employee without realizing the implications for all involved.

Use caution when transitioning employees from an hourly wage to a salary wage, as this move alone does not necessarily make an employee exempt from overtime laws. Before making a final decision, gather all the facts and determine what will benefit the employee and the practice and what is allowable by law.

Exempt versus nonexempt status

Your first task is to determine whether the employee would qualify for exempt status in a salaried position. Job titles and positions have little to do with exempt status unless the employee falls into the "white-collar" category, which is described in more detail below. Check the Department of Labor (DOL) website, http://dol.gov/, for the exact list of rules outlining whether an employee is eligible for exempt status under the Fair Labor Standards Act (FLSA).

But don't stop there—in addition to these federal guidelines, state laws may have their own definitions of exempt versus non-exempt. In some states, specific job titles may exclude team members from an exempt status, thus making the practice owner liable for overtime pay regardless of whether the employee is paid an hourly or salaried wage. Other states, like California, are likely to have more rigid definitions of exempt status, so be sure to check out any state or local laws that may apply.

Explore and be aware of positions that are considered "white-collar." Employees in these positions—which include executives, administrative employees, professionals, those engaged in outside sales and those conducting computer-related work—may be considered exempt through the FLSA. Apply the following three questions set forth by the FLSA to determine whether an employee in a white-collar position would be considered exempt under the law:

> Does the employee's salary meet the minimum requirements for salary level wages?

> Is the employee paid a regular, predetermined amount on a preset basis, such as weekly or biweekly? In addition, is the salary unable to be reduced, except in specific circumstances?

> Are the assigned job duties and functions in alignment with the rules set forth by the FLSA for each position? (If you are unsure, contacting an employment law attorney can help to clarify how these rules apply to your practice.)

While most veterinarians will be eligible for exemption status based on their professional abilities and perhaps even their pay scale, veterinary technicians do not fall into this category and are therefore not exempt employees as described in the Department of Labor Fact Sheet No. 170.

If the employee does not qualify as exempt, your decision is made. However, if the employee does qualify for exempt status, consider other variables before making a final decision. For example, it's a good idea to review the total compensation package in addition to the employee's hourly wage. And consider other factors, such as the practice budget, employee attributes and the amount of continuing education the employee has pursued.