CFR |
Code of Federal Regulations Pertaining to ESA |
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Chapter
V |
Wage and Hour Division, Department of Labor |
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Part
541 |
Defining and Delimiting the Exemptions for Executive,
Administrative, Professional, Computer and Outside Sales Employees |
- Section Number: 541.604
- Section Name: Minimum guarantee plus extras.
(a) An employer may provide an exempt employee with additional
compensation without losing the exemption or violating the salary basis
requirement, if the employment arrangement also includes a guarantee of
at least the minimum weekly-required amount paid on a salary basis.
Thus, for example, an exempt employee guaranteed at least $455 each
week paid on a salary basis may also receive additional compensation of
a one percent commission on sales. An exempt employee also may receive
a percentage of the sales or profits of the employer if the employment
arrangement also includes a guarantee of at least $455 each week paid
on a salary basis. Similarly, the exemption is not lost if an exempt
employee who is guaranteed at least $455 each week paid on a salary
basis also receives additional compensation based on hours worked for
work beyond the normal workweek. Such additional compensation may be
paid on any basis (e.g., flat sum, bonus payment, straight-time hourly
amount, time and one-half or any other basis), and may include paid
time off.
(b) An exempt employee's earnings may be computed on an hourly, a
daily or a shift basis, without losing the exemption or violating the
salary basis requirement, if the employment arrangement also includes a
guarantee of at least the minimum weekly required amount paid on a
salary basis regardless of the number of hours, days or shifts worked,
and a reasonable relationship exists between the guaranteed amount and
the amount actually earned. The reasonable relationship test will be
met if the weekly guarantee is roughly equivalent to the employee's
usual earnings at the assigned hourly, daily or shift rate for the
employee's normal scheduled workweek. Thus, for example, an exempt
employee guaranteed compensation of at least $500 for any week in which
the employee performs any work, and who normally works four or five
shifts each week, may be paid $150 per shift without violating the
salary basis requirement. The reasonable relationship requirement
applies only if the employee's pay is computed on an hourly, daily or
shift basis. It does not apply, for example, to an exempt store manager
paid a guaranteed salary of $650 per week who also receives a
commission of one-half percent of all sales in the store or five
percent of the store's profits, which in some weeks may total as much
as, or even more than, the guaranteed salary.
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