Labor Laws for Salary Employee

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Hourly employees’ are paid according to the number of hours worked in a given pay period. Consequently, their pay may fluctuate each pay date. However, this is not usually the case for a salaried worker. A number of labor laws apply to salaried employees.

General Rule

According to the U.S. Department of Labor, workers who are paid a predetermined amount during each pay period classify as salaried employees. Typically, the salaried worker’s pay remains the same each pay period, except for when he’s had a pay adjustment or a change in his deductions.

The employer cannot reduce a salaried employee’s pay because of changes in the quality or in the amount of work the latter performs. Besides a few exceptions, as long as the salaried worker performs work in a given week, he must receive his full pay for the week, regardless of the amount of hours or days worked. The employer does not have to pay him for the week in which he performs no work.


Under the Fair Labor Standards Act, most salaried employees do not qualify for minimum wage and overtime pay. This includes executive, administrative, professional, and some computer employees plus outside sales workers.

To obtain this “exempt” status, each group must satisfy specific tests. For example, an executive worker must meet the minimum salary requirement of $455 per week. His main responsibility must be overseeing the organization or a recognized division within it. Furthermore, he should frequently direct the work of at least two full-time workers and have the authority to employ and terminate other workers.


The employer may deduct a salaried employee’s pay becuase of an absence from work for reasons besides illness and disability. That means if the employee takes two days off to handle personal matters, the employer may dock his pay for two full days. But if the employee is absent for two-and-a-half days for personal reasons, the employer can only deduct two days’ pay. Specifically, the employer cannot dock the salaried employee for a half-day taken.

The employer may dock the salaried employee’s pay if he takes more benefit days (for example, personal and sick days) than he has available. Furthermore, she may deduct his pay for disciplinary reasons, such as placing him on unpaid suspension for violating the company’s policy. She may also prorate a salaried employee’s pay in new hire and termination situations.


When deducting or prorating the salaried employees’ pay, do so using their hourly or daily rate. For example, say the employee earns an annual salary of $47,000, paid bi-weekly.

To find the daily rate, divide the salary by 26 pay periods, and divide that number by 10 to reflect each day of the pay period. A daily rate calculation, in this case, would result in $180.77.