Payroll/personnel budgeting
Before you put a dollar figure on a staff line, classify the position. The classification decides whether overtime is even a question.
Payroll budgeting starts with classifying every paid position as exempt or nonexempt under the Fair Labor Standards Act. Exempt staff need a guaranteed salary at or above a federal minimum, reported at $684 a week, plus duties that meet the exemption's test. Nonexempt staff must be budgeted for overtime any week they exceed 40 hours.
Classify the position before you budget the dollar
Every paid role at your association, an on-site manager, a maintenance lead, front-desk staff, falls into one of two federal categories: exempt or nonexempt. Nonexempt staff must be paid overtime for hours worked beyond 40 in a single workweek, and each workweek stands on its own; a slow week does not offset a busy one. Exempt staff are paid a fixed salary regardless of hours, but only if the position clears two separate tests.
"Be paid on a guaranteed salary basis at a rate of at least $684 per week"
Source: elaws FLSA Overtime Security Advisor, U.S. Department of Labor, Wage and Hour Division
That salary figure is set by federal regulation and has changed before, including litigation that blocked at least one proposed increase. Confirm the current number with your payroll provider or employment counsel before you lock it into next year's budget, rather than carrying forward whatever figure appeared in an old worksheet.
A title never substitutes for the duties test
The salary threshold is only half of the exemption. The position also has to meet a duties test specific to the exemption claimed, executive or administrative, among others. Renaming a maintenance lead "Property Manager" or paying someone a salary above the threshold does not, by itself, make the role exempt. What the person actually does day to day is what the test examines.
This matters for budgeting because a board that assumes a title settles the question can end up owing back overtime for a position that was never properly classified, a liability that shows up nowhere in the operating budget until it does.
Nonexempt overtime is a weekly number, not an annual one
For nonexempt staff, overtime is measured week by week. A front-desk employee who works 45 hours during one seasonal push owes overtime for that week regardless of how few hours they logged the month before. When you build the payroll line, that means budgeting for the seasonal weeks you can already see coming, snow events, storm cleanup, an association-wide move-in weekend, rather than smoothing the year into a flat average that quietly assumes overtime away.
Many states also set their own minimum wage or exempt-salary rules above the federal floor. Check your state's wage and hour agency and your payroll provider for whichever threshold is higher; the federal number is a floor, not the last word.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Your board renames the maintenance lead role to "Property Manager" without changing job duties or pay. What happens to that employee's overtime eligibility?
Your nonexempt front desk staffer works 45 hours in one week during a busy season. How should the payroll budget treat that week?
A director wants to budget next year's exempt salaries using last year's federal minimum salary threshold, assuming it never changes. What is the risk?
Sources
- elaws FLSA Overtime Security Advisor, U.S. Department of Labor, Wage and Hour Division
Budgeting
Next, see how a contingency line gives your budget room for the seasonal overtime and other surprises payroll can't fully predict.
Which duties qualify a position for the executive or administrative exemption, the current federal salary threshold, and any state minimum wage or exempt-salary rule above the federal floor all vary and change over time.