Adriana S. Kosovych, Member of the Firm in the Employment, Labor & Workforce Management practice, authored an article in Law360, titled “What Employers Must Know About FLSA ‘Salary Basis’ Rule.” (Read the full version – subscription required.)
Following is an excerpt:
This article details the “salary basis” requirement for the administrative, executive and professional employee exemptions under the federal Fair Labor Standards Act and discusses how employers can avoid jeopardizing an employee’s exempt status under the FLSA through improper deductions.
This article also briefly discusses the U.S. Supreme Court’s February decision in Helix Energy Solutions Group Inc. v. Hewitt. …
To satisfy the salary basis requirement, an employee must regularly receive a predetermined, equivalent amount of compensation each pay period — in other words, a salary. Pay periods must be at least one week in length. The employer must take care not to destroy the salary basis by making improper deductions.
As a general matter, an exempt employee must receive his or her full salary for any week in which the employee performs any work, regardless of the number of days or hours the employee worked.
Employers may not reduce an exempt employee’s salary because of variations in the quality or quantity of the work performed. Employers need not pay an exempt employee’s salary for a workweek in which the employee performs no work. An employer can set an employee’s predetermined salary as low as $684 per week, or $35,568 per year. Note, state law may set a higher salary threshold in certain jurisdictions.