Salary Basis Test

What is the salary basis test?

The "salary basis test" is one way the Fair Labor Standards Act (FLSA) distinguishes exempt from non-exempt employees to determine overtime eligibility. To be exempt, an employee must be paid "on a salary basis." This means, (a) they must receive a guaranteed minimum amount in every paycheck no matter how many hours were worked, and (b) the employee's pay can’t go up or down based on the quality or quantity of work performed.

Certain kinds of employees are exempt regardless of the salary basis pay requirement. Doctors, lawyers, and schoolteachers, for example, are all exempt even if they are paid an hourly wage rather than salary.

What are the requirements to be a salaried employee?

Any worker that is paid a fixed amount of money by their employer is considered a salaried employee. The salary is paid on a regular basis, either by monthly paycheck or bi-weekly paycheck. Salaried employees must be paid for any week they work. These types of employees usually aren't entitled to overtime pay, unless they earn less than $58,656 per year.

Misclassifying an employee can lead to fines and penalties from the government. Misclassed workers who are employees under the FLSA are still legally entitled to the wage and hour protections. Therefore, employers should make sure to carefully review and understand the qualifications of a salaried employee at the state level before classifying a salaried employee.

What is the minimum amount for salary?

Federal law requires that salaried employees must be paid no less than $1,128 per week to be exempt from overtime pay. They must also meet certain tests related to their job duties. Though in some cases, employers can pay their workers less than these amounts, in which case the employees may be entitled to overtime pay.

Are salaried employees entitled to overtime pay?

Not usually. Employees may be entitled to overtime pay if they make less than $1,128 per week, or don't perform exempt duties. Many states have their own set of requirements for wages and overtime pay. Therefore, employers must follow federal and state laws regarding overtime pay for salaried employees.

Do salaried employees have to work 40 hours a week?

Salaried employees aren't legally required to work 40 hours per week. A 40-hour workweek is typical of a salaried employee, but their hours can change day to day or week to week without any legal repercussions or changes in a paycheck. An employer can legally ask an employee to stay late or allow them to leave early without changing their wages.

Salaried employees will get the same paycheck regardless of how many hours they work in a week. For example, a salaried employee might work 37 hours one week, 38 hours one week, and 43 hours another week. Despite the fluctuation in hours, they will still receive the same paycheck in the upcoming pay period.

Can a salaried employee refuse to work overtime?

A salaried employee generally can't legally refuse to work overtime. Salaried employees agree to a job that has the same pay regardless of hours of work or quantity of work completed each week.