Content Last Revised: 4/23/04 ---DISCLAIMER---

29CFR541.604 - Minimum guarantee plus extras.

• 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.