The Salary Basis Test is a legal requirement used to determine whether an employee qualifies as exempt from overtime pay under laws like the Fair Labor Standards Act (FLSA). To meet this test, an employee must receive a predetermined, fixed salary not subject to reduction based on hours worked or quality of work. This means the employee must be paid the full salary for any week in which they perform any work, regardless of the number of hours or days worked, with limited exceptions.
As of the current regulation, the minimum salary threshold is $684 per week. The salary must be paid on a regular basis - weekly or less frequently - and cannot be docked for partial-day absences or lack of available work, provided the employee is ready, willing, and able to work.
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Key Facts
- Fixed Weekly Pay: The employee must receive a set amount each week, regardless of hours worked.
- No Reductions: Pay cannot be docked for partial-day absences or work quality (with a few exceptions).
- Exemption Requirement: It's one of the three tests (along with duties and salary level) used to classify exempt employees.
- Threshold Changes: The minimum salary amount required for exemption may change with updated labor regulations.
- Legal Consequences: Failing to meet the salary basis test can lead to reclassification as non-exempt, requiring overtime pay.
1. Why is the salary basis test important?
It helps determine if an employee qualifies as exempt from overtime pay requirements.
2. What is the minimum salary for exemption under this test?
This amount is set by the Department of Labor and may change; as of 2024, it’s generally $684 per week.
3. Can an employer reduce an exempt employee’s salary?
Not for partial-day absences or minor work issues; doing so may violate the test.
4. What are the other two exemption tests besides salary basis?
The salary level test (minimum amount) and the duties test (job responsibilities).
5. What happens if the salary basis test isn’t met?
The employee must be classified as non-exempt and entitled to overtime pay.
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