Virginia Business Lawyers

FLSA Salary Requirements

Of all the misconceptions employees and employers have regarding overtime pay, perhaps the most common is the belief that an employee is exempt from the Fair Labor Standards Act’s overtime requirements merely because that employee is paid on a salary basis.   While it is generally true that the FLSA salary requirements obligate employers to pay employees on a salary basis, it is not true that an employee will be exempt from the FLSA simply because the employee receives a salary.

Robert Byrne, Jr.

There are generally two FLSA salary requirements employees must meet to be exempt from paying overtime.  First, the employee must be paid on a salary basis, which means the employee must be paid a certain predetermined amount of pay for a specified pay period.  This salary basis means the pay amount must not fluctuate based on the quantity or quality of the work the employee performs during a given pay period.  And, subject to some exceptions, the employee must be paid the entire amount for any week in which the employee performs any work.  The employee need not be paid a salary for weeks during which they do not perform any work, however.

The second FLSA salary requirement to be exempt from the FLSA is that the employee must receive a minimum salary amount.  As of 2013, the minimum salary level amount must be no less than $455 per week.  This $455 amount must be paid “free and clear,” meaning that it cannot include the value of any non-cash benefits that may be provided as a benefit of employment, such as lodging, food, or other benefits.

Employers need not pay employees on a weekly basis so long as the $455 weekly amount is pro-rated.  So, in other words, employees who are paid on different pay periods will still meet the FLSA salary requirements provided those employees receive the equivalent amount of $455 per week.  That means employees who are paid biweekly must receive at least $910; employees who receive semi-monthly paychecks must be paid at least $985.83; and employees paid on a monthly basis must receive at least $1,971.76 per month.

Employers that fail to meet these FLSA salary requirements, either by not paying on a salary basis, not meeting the minimum salary level of $455 per week, taking improper deductions from an employee’s salary, engaging in certain forms of improper payroll practices, or not meeting one of the narrow exceptions to the salary basis, run the risk of losing the overtime exemption to the FLSA.  And, as I explained before, the damages available for overtime violations can be severe.

If you are an employee wondering if you are entitled to overtime pay, don’t make the common mistake of believing you are exempt from overtime pay merely because you are paid on a salary basis.  The salary basis of pay is generally a requirement for an exemption, but you must also be paid a certain salary level of a minimum of $455 per week to trigger the exemption.

Having covered the salary requirements, it is important to point out that the meeting these requirements is necessary to be exempt from the FLSA’s overtime obligations, but it may not be sufficient.  Put a little bit differently, just because you are paid on a salary basis and you are paid the minimum salary level does not mean that you are not entitled to overtime pay.  This is because your job must still fall within one of the established FLSA exemptions for overtime pay.  For more information about whether you are covered by the Fair Labor Standards Act’s overtime requirements, please check out the article Am I Entitled to Overtime Pay?

This post was written by Robert E. Byrne, Jr., an Overtime Lawyer and Business Litigation Attorney with the Virginia law firm MartinWren, P.C.  If you have any questions about the FLSA Salary Requirements, please feel free to contact Bob at 434-817-3100 or by email at [email protected].