Salaried Exempt Labor Laws

By Grace Ferguson
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The Fair Labor Standards Act determines whether an employee is nonexempt or exempt. More commonly, nonexempt employees are hourly and exempt employees are salaried. The Fair Labor Standards Act's (FLSA) overtime and minimum wage labor laws protect nonexempt employees, but does not extend to exempt employees. To be labeled salaried exempt, the employee must satisfy certain criteria.

Exempt Status

A qualified nonexempt employee is entitled to overtime pay so long as he works at least 40 hours in the workweek. Furthermore, he must be paid at least the federal minimum wage. But a salaried exempt employee is exempt from both minimum wage and overtime laws. Salaried exempt employees include executives, administrative, professional, outside salespeople and some computer employees. Highly compensated computer professionals such as software engineers, system analysts and programmers are exempt from minimum wage and overtime pay. Creative professionals such as sculptors and artists are also exempt. To obtain salaried exempt status, the individual must be paid on a salary basis and meet the tests that exclude him from minimum wage and overtime pay.

For instance, an executive employee is classified as salaried exempt if he earns a minimum salary of $455 per week. His main responsibility must include directing the work of two or more full-time workers and managing the organization or one of its recognized divisions. He must also have the authority to hire and terminate other employees or his views on such matters should be given considerable weight.

Payment Rule

According to the U.S. Department of Labor, an employee is paid on a salary basis if she is paid a predetermined amount each pay period on a weekly or more infrequent basis, such as biweekly or semimonthly. Typically, a salaried exempt employee receives a set pay each pay date. Her pay only changes when she has had a pay adjustment or a deduction change.

She must receive her full pay each payday regardless of how many hours or days she works and regardless of changes in the amount or quality of work done. But the employer does not have to pay her for weeks in which she performs no work.

For instance, if she earns $64,000 annually and gets paid semimonthly, the pay calculation would be: $64,000 / 24 semimonthly pay periods = $2,666.67, gross semimonthly pay each payday.

Deductions

Under specific circumstances, the employer can dock a salaried exempt employee’s pay. The employer may make the deduction if the employee is absent for one or more full days for personal causes besides sickness and disability. He must make the deduction in full-day increments.

For instance, say the employee takes two and a half days off to handle personal affairs. He can deduct her pay for only two days. Specifically, he cannot deduct for a half-day taken.

He may also deduct her pay if she takes more benefit days (such as vacation, sick and personal time) than allowed and for days resulting from disciplinary action, such as unpaid suspension.

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