Dilemma of the Month: Holding Exempt Employee Accountable

Back Q&A Feb 2, 2017 By Suzanne Lucas
Last year, we hired someone to run our small business, and we paid him very well. However, he was always coming in late, taking Fridays off, calling in sick, having car trouble and dentist appointments, etc. He was an exempt employee, so we kept paying him as if he was there all the time. He quit and we don’t want to have the same problems with the new hire. Of course, we don’t mind if this person has a doctor’s appointment from time to time, but don’t want the constant absences we had with the last manager. What can we do to make our exempt employee accountable for his or her hours?

First, let’s define an exempt employee: Under the Fair Labor Standards Act, employees are owed overtime pay if they work more than 40 hours in one week (or over eight hours in one day in California). To be exempt from this law, you need to meet certain criteria, such as managing two or more people, having advanced skills and working independently, and making a certain level of salary ($47,476).

The person managing your business almost certainly qualifies for this exemption, since he’s managing others and has serious responsibilities. This means he can be paid a salary and isn’t owed any overtime pay, regardless of how many hours he works. The flip side is that if he does any work at all during the week, you still have to pay him the same amount. Allowed deductions are rare for exempt employees.

Your last employee took advantage of this and worked as few hours as possible, while still pocketing his entire paycheck. Understandably, you don’t want this to happen again. And you don’t have to let it.

Being exempt doesn’t mean employees can set their rules and hours

In theory, exempt employees should be allowed more flexibility, because they are being paid to do the job, not to work certain hours. But it doesn’t mean that you, as the boss, can’t set requirements for exempt employees as well. Saying that they must be in the office during core business hours (which can vary depending on your business) is perfectly fine. Saying that all exceptions must be approved by you first is also fine.

The prior approval is only necessary when you have an employee who takes advantage of the situation like your previous manager did. Otherwise, you can likely trust people to go to their doctor’s appointments and children’s school programs without having it damage the business. Most people will behave responsibly.

If an employee violates your trust, you can sit down and say, “We need you to be here Monday to Friday from 8 to 5 with no more than an hour for lunch. If you leave without permission again, we’ll have to write you up.” Treat repeated violations the same way you would with a non-exempt employee (someone paid by the hour). Too many violations and you fire the person.

Set expectations from day one

Since you’re hiring someone new, in the job interview you can lay out the expectations. This should include everything from: “You always need to put in at least 45 hours per week. We don’t care when you do it, so long as the hours are met” to “If you want to work at home, you can do so, but not more often than one day per week.” You are the boss and you set the rules. If you’re clear during the hiring process, you will (hopefully) hire someone who is a good fit from day one.

Ask about transportation in the interview

Lots of entry-level jobs ask if you have reliable transportation, but we don’t tend to ask that in management interviews. We assume that everyone making a good salary will have a functioning car, which isn’t always the case. There’s no need to dwell on this question, just say, “Reliable transportation is needed for this job. Do you have reliable transportation?” Please note, unless this job requires driving as part of the job — visiting sites, doing sales calls, etc. — you shouldn’t ask if they have their own car. It doesn’t matter if they take the bus, an Uber, walk or ride a unicycle to work; it only matters that their method of arriving at work is fairly reliable. Everyone has car problems from time to time, or the bus comes late or the unicycle gets a flat, but that should not happen regularly.

Address problems immediately

Don’t wait! If your new manager calls in sick two Fridays in a row, sit down with him and address this potential issue. If he’s gone for multiple doctor’s appointments in a week, ask him if everything is OK and encourage him to call your Employee Assistance Hotline — if your company has one — if he needs help. Keep in mind that doctor’s appointments may be covered under the Americans with Disabilities Act, so if he needs accommodations, be sure you provide those.

The key to managing an exempt employee’s hours is to be upfront from the start. Then you’ll be good to go.


Maria Rose (not verified)February 20, 2017 - 11:58am

I am very glad to see that an employer can set rules in place for an exempt employee. Too many exempt employees have abused this situation of getting a salary while not really doing the required hours because they figured that if they finish assignment they won't have to also put in the time. A salary is a guarantee pay for both a designated hours and completion of duties. As most salaried personnel are in a management position, the company expects them to be present at key times. A good aware business owner would notice when an employee starts always leaving early on a Friday and always needs weekends off. Unless your business is closed on weekends, a business needs the manger present on key work days not the slowest days of week. This should be emphasized at hire and any deviation should be addressed immediately, not let to slide into a habit. If potential employees states a need for repeatedly needing time off for appointments which can be scheduled on days off rather than key days of work., their dependability for job is questionable, unless company only needs a manager only on slow days at work.

Visitor (not verified)December 14, 2019 - 1:13am

An exempt person is paid for completion of a job, not for hours, so, technically, if they have "finished (their) assignment" for that week, they get full pay, even if it takes much less than 40 hours. If that happens often, the job is not structured properly and a reasonable amount of work needs to be added. Also, people are different. One person might complete a full week's work in 38 hours, while another may take 50 for the same work. The more productive person should not have to hang around more hours just to complete an arbitrary number.

Narrow (not verified)February 20, 2017 - 4:49pm

The salary number is wrong. The law change to raise the number from $23k to $47k was halted ~10 days before it was to go into effect.

Chelsea (not verified)February 21, 2017 - 9:56am

Good advice here (as usual!). I would add that you may see results by making it about the work they are assigned/results they drive than the hours they keep. What projects or workload is being impacted their absences? How is it affecting the team and the business? Good luck!

Jerry (not verified)August 1, 2017 - 2:48pm

Employers abuse exempt employees all the time! "Exempt" really means "exempt from fair treatment." I've heard it over and over, "We pay you for 168 hours a week. If you get nights and a few Sundays off, consider yourself lucky. You don't like it? Go sweep floors as an hourly!" Exempt employees rarely abuse what little flexibility they might get, but employers abuse their exempt employees every day.

Sicarian (not verified)March 18, 2021 - 9:31pm

Funny how this does not apply in any way in the reverse, where the employer works the exempt employee to such a degree it requires hospitalization.