Question: May I provide an exempt employee with additional compensation for working longer hours on a time-sensitive project without losing the exemption?
Answer: Yes. If you have a position that is classified as exempt—meaning the position is exempt from minimum wage requirements and overtime pay as determined by the Fair Labor Standards Act (FLSA)— that does not prevent you from providing that employee with additional compensation to express appreciation when the employee works more hours than expected. Unlike non-exempt employees who are compensated for the time they work, exempt employees are paid on a salaried basis for the work they do.
When You Can Give Additional Pay to an Exempt Employee
You may provide the employee with additional compensation if the employment arrangement includes a guarantee of at least the minimum weekly-required amount paid on a salary basis. For example, suppose you have an employee working in a position classified as exempt. The current salary level for this employee is $2,000 each week, paid on a salaried basis. As long as the employee continues to receive the salaried pay of $2,000 each week, you may provide additional compensation for hours worked beyond the normal workweek. Additional compensation may be paid on any basis including flat sum, bonus payment, straight-time hourly, time-and-one-half, additional paid time off, or other methods used to reward employees for extraordinary work.