There are so many aspects to a job nowadays. Aside from the hours, responsibilities and challenges we face, there are also pay grades that can get confusing really fast. But one of the most confusing ones among them is the minimum salary exempt employees are supposed to receive. How does this apply to us anyway?
There is no minimum salary for exempt employees in the United States. The Fair Labor Standards Act (FLSA) does not set a minimum amount for exempt employees. However, some states do have their own rules regarding minimum salaries for exempt employees.
The FLSA requires that all employees be paid at least $7.25 per hour, unless they are exempt from the FLSA’s overtime requirements.
Exempt employees are those who are not covered by the FLSA because they work in executive, administrative or professional positions. To be considered an exempt employee, you must meet certain criteria established by the FLSA:
You must earn a certain minimum salary to qualify as an exempt employee; however, there is no minimum salary requirement under federal law. Some states may have their own rules regarding minimum salaries for exempt employees.
You must perform your job duties primarily on a full-time basis; part-time workers cannot be classified as exempt employees under federal law. However, some states may have their own rules regarding this issue as well. Again, check with your state labor department to learn more about its requirements for classifying an employee as an exempt employee and what type of work schedule it considers “full time.”
Is there a minimum salary for exempt employees
No, there is no minimum salary for exempt employees.
Whether a worker is exempt from the overtime rules depends on whether he or she meets certain requirements. The FLSA does not establish a minimum salary for exempt employees, however, employers are required to pay non-exempt employees at least $455 per week in 2019.
Exemptions from the overtime pay requirement can be found in FLSA Section 13(a)(1) and include:
- Executives — An employee whose primary duty includes management of two or more full-time employees; or managing an enterprise with annual revenue exceeding $500,000; and also having power over hiring/firing decisions, controlling others’ work schedules, etc., is considered an exempt executive employee.
- Administrative — An employee whose primary duty includes administrative tasks related to general business operations (or any other type of theoretical work) rather than production activities is considered administratively exempt. Administrative exemptions include tax examiners; librarians (but not library technicians); proofreaders; statisticians; actuaries; accountants (but not bookkeepers or accounting clerks). These professions must meet all three elements of the test: discretion and independent judgment as well as industry regulation knowledge
You are not required to pay exempt employees a minimum salary.
As an employer, you are not required to pay exempt employees a minimum salary. You may choose to do so, but it’s not necessary. An exempt employee is someone who is paid on a salary basis and performs certain types of work for your business. The basic rule for determining if someone is an exempt employee is whether or not she receives at least $455 per week. If she does, then you don’t have to worry about paying her overtime when she works more than 40 hours in one week (some exceptions apply).
To determine whether your employee fits into this category, keep in mind that the rules for exempt status are very strict and few workers qualify as such — only those who meet all three parts of the following test:
- The employee must perform professional duties on a regular basis
- The employee’s primary job duty must be managing the enterprise (or part of it), i.e., exercising discretion and independent judgment; and
- The employee must earn more than $23,600 per year ($455*40hrs/week)
However, there are caveats.
However, there are caveats. For example, an employee may be exempt if they meet the salary basis test and their primary duties involve administrative duties or professional services. Additionally, those employees who perform certain types of highly specialized jobs and meet certain minimum qualifications can also be considered exempt.
The Department of Labor says you must follow other requirements when deciding whether or not an employee should be classified as exempt, whether they will be paid a salary or an hourly wage.
Some of the other requirements you must meet include:
- Paying exempt employees at least $455 per week, or $23,660 annually.
- Having job duties that meet the requirements for executive, administrative and professional exemptions.
- Making sure your exempt employees are paid on a salary basis and not by the hour.
Exempt employees must be paid on a salary basis.
Exempt employees must be paid on a salary basis. A salary is a fixed amount that does not vary with the number of hours worked in any workweek. For example, if your salary is $600 per week and you work 40 hours during the week (Monday through Friday), your total earnings are $1,200 for that week ($600 x 4 = $2,400 divided by 52 weeks per year = $38.59).
In order to receive exempt status under FLSA regulations, salaried employees must meet all three of the following requirements:
- They must receive compensation at least equal to $455 per week;
- They must be paid on a predetermined and fixed schedule; and
- They may not be employed in excess of 80 hours in any workweek without receiving overtime pay
Exempt employees must receive at least $455 per week.
The FLSA also sets the minimum requirement for exempt employees at $455 per week. The federal law does not set a specific minimum hourly rate, but it does require that you pay your exempt employees at least this amount on a weekly basis. You don’t have to pay overtime for hours worked beyond 40 hours in a week, but if you do want to provide this benefit in addition to their regular salary (and they work more than 40 hours in a week), then you’ll need to include it as part of their exempt status or make them non-exempt.
Exempt employees must be paid on a salary basis and meet certain other requirements as well:
- They must be paid an established fixed rate based on duties performed rather than by the hour;
- They can’t spend most of their time performing manual labor or doing other non-exempt tasks;
- Their primary duty must involve exercising independent judgment and discretion; and finally,
- They must have authority over other workers or significant decision-making power within your company
Minimum wage and overtime laws do not apply to exempt salaried employees.
The FLSA does not require employers to pay exempt employees on an hourly basis or pay time and a half for overtime hours. These employees are paid a salary that is fixed in advance, regardless of the number of hours worked. They must receive the same amount each week regardless of the number of days they work, or the time they spend working.
Exempt employees are protected by other laws, such as Title VII (employment discrimination), OSHA (occupational safety), FMLA (Family Medical Leave Act), ADEA (Age Discrimination in Employment Act) and ADA (Americans with Disabilities Act). In addition to being protected by these laws, exempt employees may be eligible for additional benefits such as medical insurance coverage and paid vacations if employed for more than one year with the same employer.
As we can see, there will be no minimum salary requirement for exempt employees under the Fair Labor Standards Act as of January 1st, 2020. This means that employers have more flexibility if they want to designate certain positions as exempt from overtime pay laws. However, this does not mean that companies should use this opportunity to reduce wages or take advantage of their workers by making them do extra work without fair compensation.