The Fair Labor Standards Act (FLSA) classifies employees as exempt and non-exempt from minimum wage and overtime requirements. Salaried employees are exempt. They aren't entitled by law to receive a minimum wage per hour or to overtime when they work more than 40 hours a week. The classification of an employee as exempt is based on job duties and pay level, not on job title.
The Wage and Hour Division of the Department of Labor describes a salaried employee as someone who receives a predetermined amount in pay for each week. The employer must pay a salaried worker the same amount regardless of the quality or quantity of work, or whether work is available, so long as he's ready, willing and able to work. A salaried employee's pay isn't based on the number of hours worked in a week.
Under the FLSA, administrative, professional, executive, outside sales and computer workers can be classified as exempt from minimum wage and overtime laws if their jobs meet specific criteria. The employer can't put an employee on salary to evade overtime laws. Classification is based on job duties and other criteria, including pay level.
For example, to qualify for exempt status, an administrative employee must receive a minimum salary of $455 per week. Her main duties must be office or non-manual work linked directly to management, business operations, or customers. Furthermore, her primary duties must require use of her own judgment and discretion on significant matters.
Teachers are classified as exempt employees. The law excludes some workers from being classified as exempt employees, including most police officers and firefighters. In general, non-management blue-collar workers can't be classified as exempt.
Under specific circumstances, the employer doesn't have to pay a full week's salary to an exempt worker. If he takes more time off (such as personal, sick and vacation time) than company policy allows, or if he violates company policy and is disciplined with an unpaid suspension, the employer may deduct pay for the missed days.
The reduction should be based on full days, not half days. For instance, if a salaried employee misses three and a half days of work, pay should be reduced for three days only.
The employer does not have to pay a full week's salary if someone is hired after the pay period begins or terminated before it ends. The salary for that pay period can be prorated based on an hourly or daily rate.
More than 130 million American workers are covered by the provisions of the FLSA, according to the Department of Labor. The law applies to companies and organizations with at least two employees and an annual sales or business volume of at least $500,000. It also applies to government agencies, hospitals, businesses that provide medical or nursing care to residents, schools and preschools. In addition, it applies to individual employees involved in any form of interstate commerce as part of their job duties and to domestic service workers.
Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.