Overview: The most frequently applied employee classification exemptions from the overtime requirements of the Fair Labor Standards Act (FLSA) all have a single requirement in common: to qualify, employees must be paid on a salary basis. This prerequisite is often referred to as the salary basis test.
An employee generally will satisfy the salary basis test if:
The second requirement trips up some employers, who mistakenly assume that they can dock an exempt employee's salary for infractions such as reporting to work late or failing to meet production quotas.
As with most things involving the FLSA, there are many exceptions and variations to the basic rule.
Trends: Effective December 1, 2016, the minimum weekly salary for most FLSA-exempt employees will increase from $455 to $913. Starting in 2020, and every three years thereafter, the minimum salary level will be automatically adjusted based on the 40th percentile level of full-time salaried workers in the lowest-wage Census region.
Author: Michael Cardman, Legal Editor
Several states have filed a lawsuit asking a federal court to nullify new Fair Labor Standards Act (FLSA) overtime regulations from the US Department of Labor (DOL) before they take effect December 1.
Several resources have been updated or added to reflect final regulations from the US Department of Labor (DOL) that will raise the minimum salary for an employee exempt from the overtime requirements of the Fair Labor Standards Act (FLSA) from $23,660 to $47,476, effective December 1, 2016.
Updated to reflect forthcoming FLSA overtime exemption requirements.
HR guidance on complying with the salary basis test of the Fair Labor Standards Act.