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.