Time & Attendance Warning Signs for Salary Employees
Managing salaried employees presents unique challenges compared to hourly workers. While salaried staff typically enjoy more flexibility, tracking their time and attendance remains crucial for productivity, project planning, and compliance. Here are the major red flags to watch for when monitoring salaried employees.
Enforcement
The Fair Labor Standards Act (FLSA) enforces exemptions for certain employees from overtime, also called salaried. Federal penalties for noncompliance can lead to employee back pay, liquidated damages, civil money penalty of up to $10,000 per violation, and potential criminal penalties in severe cases.
The Law
To be considered salaried, or “exempt” from overtime pay, the person in the role must:
Be paid a predetermined and fixed amount that cannot be reduced because of variations in the quality or quantity of work performed.
Be paid at least a specified weekly salary level of $684 (as of the date of this writing) and must receive the full salary for the week in which they perform the work, regardless of number of days or hours worked.
Primarily perform executive, administrative, or professional (EAP) duties as outlined by the DOL.
These rules do not apply to outside sales employees, teachers, employees practicing law or medicine, and highly compensated employees. Salaried employees do not need to be paid for a workweek in which they perform no work, but if they perform any work in a workweek, they must be paid for the entire week. Many also have their own laws governing wage and hour for salary employees.
Keeping track of work hours, breaks, and overtime correctly is critical to avoiding compliance risks and unnecessary costs. There are many other compliance responsibilities, but these are the basic laws that small business owners tend to not know or overlook. Let’s look at the top red flags that small business owners violate with salary workers.
Red Flags
1. Exempt vs. Non-Exempt Confusion
Red Flag: Treating all salaried employees as exempt without verifying their qualification for exemption status.
Perhaps the costliest mistake small businesses make is misclassifying employees as "exempt" simply because they receive a salary. Remember:
Exempt status depends on job duties (such as management or specialized professional work), not payment method.
Employees must meet specific criteria under the FLSA.
Misclassification can result in significant back pay, penalties, and legal issues.
The salary threshold for exemption is currently $35,568 annually ($684/week).
You can read more about how to determine your employees’ exemption status by reading our previous blog posts, “Ensuring Compliance for Independent Contractors and Employees in Your Small Business” and “Why the Independent Contractor Shortcut for Temporary Workers Could Cost You Big.”
2. The Disappearing Act
Red Flag: Employees who are consistently unavailable during core business hours without communication, or who can't be reached when needed by colleagues.
Salaried employees may feel their physical presence is less important since they're not "on the clock." While flexibility is often a benefit of salaried positions, complete unpredictability can disrupt team dynamics.
For salaried employees, the focus shifts from hours worked to results produced. However, time tracking remains valuable for project management. If you have clearly set expectations (preferably in writing such as in a policy) with the employee about beig available during the workday and are still having issues reaching an employee, follow a progressive discipline process to rectify the behavior. See our previous blog post, “Mastering Effective Progressive Discipline in a Small Business.”
3. The Overtime Martyr
Red Flag: Employees regularly logging 50+ hour weeks.
Some salaried employees wear excessive overtime as a badge of honor. While dedication is admirable, chronic overwork often signals deeper issues. This can indicate:
Inadequate staffing
Inefficient processes
Poor work-life boundaries that may lead to burnout.
Read our previous blog posts, “Understanding and Addressing Burnout for Small Business Owners – Part I” and “Understanding and Addressing Burnout for Small Business Owners – Part II” to learn more about how to prevent burnout in the employee who consistently works over 40 hours a week.
4. Inconsistent Activity Patterns
Red Flag: Sharp drops in engagement metrics (system logins, communication activity, project updates) without explanation.
While daily fluctuations are normal, dramatic inconsistency across weeks or months may indicate underlying issues such as disengagement, personal problems, or dissatisfaction with work.
5. The Clock-Watcher Mentality
Red Flag: Employees who meticulously track exactly 40 hours per week regardless of project needs, or who regularly end work precisely at closing time even during critical phases.
Some employees bring an hourly mindset to salaried positions, focusing more on time served than results achieved. Also, if you require salaried employees to clock in and out without offering overtime pay, you may have misclassified them as exempt.
6. Location Tracking Overreach
Red Flag: Implementing invasive monitoring without clear business justification can destroy trust and morale.
Some businesses have increased surveillance of salaried employees with the rise of remote and hybrid work commonplace. Focus on employee results rather than constant observation.
Implementing Solutions
Rather than waiting for problems to emerge, proactive small business owners can:
Clearly Define Expectations - Document core hours, communication protocols, and attendance policies.
Use Clear Job Descriptions – Make sure employees' pay structures match their actual job duties.
Focus on Outcomes - Set clear deliverables and deadlines rather than monitoring clock-punching.
Implement Appropriate Technology - Use project management tools that track progress without micromanaging.
Conduct Regular Check-ins - Address concerns before they become patterns.
Respect the Salary Bargain - Remember that salaried employees trade time flexibility for the expectation of getting the job done.
Consult an HR Professional – If you’re unsure, get expert guidance to avoid expensive mistakes.
Final Thoughts
Errors in employee time and attendance practices can lead to significant financial consequences. Recognizing these indicators can help your business avoid wage disputes, compliance issues, and lawsuits.
Contact CPR today to help you get compliant before it’s too late!
Disclaimer: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information.
