Overview: The most frequently applied 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: The US Department of Labor (DOL) is expected to issue new FLSA regulations that will raise the minimum salary for overtime-exempt employees.
Author: Michael Cardman, Legal Editor
Updated to reflect changes in the test used by the US Department of Labor to determine whether interns are employees under the Fair Labor Standards Act.
Updated to reflect the overtime and recordkeeping exemption for employees of seasonal amusement and recreational establishments, effective January 1, 2018.
Updated to reflect the 2018 annual inflation adjustments to the minimum salaries for overtime-exempt executive employees, administrative employees and professional employees, and amendments to the overtime exemption for private elementary and secondary school teachers, effective January 1, 2018.
The US Department of Labor is appealing the permanent injunction blocking the Obama administration's 2016 overtime rule not to uphold the $47,476 salary threshold but rather to preserve its authority to set a lower salary threshold.
The US District Court for the Eastern District of Texas ruled that the US Department of Labor (DOL) exceeded its authority when it raised the minimum salary for most overtime-exempt employees to $47,476 last year.
The US Department of Labor (DOL) is asking employers to offer their feedback on a variety of questions relating to its plans to update the Fair Labor Standards Act (FLSA) overtime rules.
The Trump administration defended its right to establish a minimum salary level for overtime-exempt employees in a legal brief filed June 30.
Updated to reflect technical amendments to the minimum wage and overtime exemption for certain employees of seasonal and recreational establishments, effective March 21, 2017.
An employer may use this letter if it has decided to reverse changes in pay or classification that it previously implemented, pending the outcome of the legal challenges to the injunction blocking the US Department of Labor's overtime rule.
An employer may use this letter if it has decided to delay implementing changes in pay or classification that we previously announced, pending the outcome of the legal challenges to the injunction blocking the US Department of Labor's overtime rule.
HR guidance on complying with the salary basis test of the Fair Labor Standards Act (FLSA).