HR Support on the FLSA Salary Basis Test

Editor's Note: Docking exempt employees' salaries can sometimes prove quite costly.

Michael CardmanOverview: 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:

  1. The employee is regularly paid a set amount of compensation of at least $455 per week; and
  2. The amount of compensation is not reduced because of the quality or quantity of the employee's work.

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: The U.S. Department of Labor is expected to raise the minimum salary level when it overhauls the FLSA regulations.

Author: Michael Cardman, Legal Editor

Latest items in Salary Basis Test

  • Overtime Rule Could Harm Employers, Witnesses Warn Lawmakers

    Date:
    23 July 2015
    Type:
    News

    The US House Subcommittee on Workforce Protections heard testimony about the US Department of Labor's proposal to roughly double the minimum salary for most employees exempt from the overtime requirements of the Fair Labor Standards Act (FLSA).

  • DOL Proposes Raising Salary Level for FLSA-Exempt Employees: Various Documents Updated

    Date:
    01 July 2015
    Type:
    Editor's Choice

    XpertHR has updated its content to reflect new regulations proposed by the US Department of Labor (DOL) that would raise the minimum salary for an employee exempt from the overtime requirements of the Fair Labor Standards Act (FLSA) from $455 per week to an estimated $970 per week.

  • Salary Basis Test - Checklist

    Type:
    Policies and Documents

    An employer may use this checklist to ensure sure that an employee is paid on a "salary basis," which is required by many of the exemptions from the overtime pay requirements of the Fair Labor Standards Act (FLSA).

  • Salary Basis Policy

    Type:
    Policies and Documents

    An employer may use this policy to ensure they will meet the requirements of the "safe harbor" provision of the Fair Labor Standards Act (FLSA). Under the "safe harbor" provision, employers that inadvertently make improper deductions from the pay of exempt employees can shield themselves from overtime liability if they adopt a salary basis policy and take other steps.

  • May an employer make deductions from its exempt employees' bonuses?

    Type:
    FAQs

  • DOL Plans to Double Minimum Salary for Overtime-Exempt Employees to $50,440

    Date:
    30 June 2015
    Type:
    News

    Under new Fair Labor Standards Act regulations proposed by the US Department of Labor, an estimated 4.6 million workers who are currently overtime-exempt would become eligible for overtime.

  • Classify a Position as Exempt or Nonexempt

    Type:
    Liveflo

    Use this workflow to determine if an employee is exempt or nonexempt from the minimum wage or overtime requirements of the Fair Labor Standards Act (FLSA).

  • Report: White House to Make More Employees Eligible for Overtime

    Date:
    12 March 2014
    Type:
    News

    According to the New York Times, President Obama will ask the US Department of Labor (DOL) to issue new regulations that would require employees to be paid a higher salary and spend a certain percentage of their time performing exempt work to qualify for an exemption from the overtime requirements of the Fair Labor Standards Act (FLSA).

  • Employment Law Manual Updated to Reflect New York Minimum Wage Orders

    Date:
    21 November 2013
    Type:
    Editor's Choice

    The Minimum Wage and Employee Classification sections of the Employment Law Manual now include information about upcoming changes to the minimum salary requirements for executive and administrative employees, to the minimum wage credit for tipped employees and to the allowances for meals, lodging and uniforms.

  • Infographic: Government Enforcement Trends Show that Workplace Compliance Is a Top Priority

    Date:
    01 July 2013
    Type:
    News

    Our new infographic dramatically shows the disconcerting enforcement trends facing employers throughout the US.