Definition

• Payment on a salary basis means that the employee receives a predetermined amount of compensation that constitutes all or some of his pay, weekly or on a less regular basis, such as biweekly or semimonthly. Salaried workers are typically paid a fixed salary each pay period for a certain set of work hours, such as a 40-hour workweek or a 45-hour workweek.
  
  

Exemptions

• Based on the DOL's job and/or wage-related testing criteria, a number of salaried employees are exempt from both minimum wage and overtime laws. The Fair Labor Standards Act (FLSA) regulates the latter two laws, which apply to FLSA-covered nonexempt employees. The salaried employees that are exempt from these laws are categorized as "salaried-exempt." The exemption includes administrative, executive and professional workers; some computer workers, some highly compensated (earning more than $100,000 annually) workers; and outside salespersons.
  
  For example, to obtain exempt status, an executive must receive a minimum salary of $455 per week; her primary responsibility must be managing the company or a recognized division within it; she must frequently manage the work of at least two or more full-time workers; and she must have the authority to employ or terminate other employees.
  
  

Misconceptions

• Some employers and employees believe that salaried employees do not qualify for overtime pay. But, only salary employees that do meet the DOL's testing criteria are exempt from overtime protection laws. If the salary worker is not classified as exempt, he qualifies for overtime pay. Overtime applies to hours worked over 40 in the workweek. According to the DOL, qualified salaried workers who work more than 40 hours per week should receive overtime pay at one-half their normal pay rate for the excess hours.
  
  

Deductions

• The employer can deduct a salaried employee's income if she takes time off to handle personal business, excluding for illness and disability. It must make the deduction in full-day increments. For instance, if she takes two and a half days off in such situations, the employer must deduct her pay for two days only. Specifically, it cannot dock for half-days off. Furthermore, if she exhausts her benefit days, such as vacation and personal time, and takes more than she actually has, the employer can dock her pay accordingly. It can also deduct her pay if she violates company rules, resulting in unpaid suspension. The employer must make the deduction based on her daily or hourly rate.
  
  

Considerations

• The employer can prorate the salaried employee's wages in new hire and termination situations. For instance, if she's hired six business days into the biweekly pay period, the employer can pay her from her hire date through to the pay period end date.