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The information below is designed to provide an example
of what constitutes compliance for purposes of §541.603(d) (addressing
"Effect of improper deductions from salary") and is for illustrative
purposes only. Other policies may comply with §541.603(d) which contain
more or less information.
SAMPLE SALARY BASIS POLICY
The Fair Labor Standards Act (FLSA) is a federal law which requires that
most employees in the United States be paid at least the federal minimum
wage for all hours worked and overtime pay at time and one-half the regular
rate of pay for all hours worked over 40 hours in a workweek.
However, Section 13(a)(1) of the FLSA provides an exemption from both
minimum wage and overtime pay for employees employed as bona fide executive,
administrative, professional
and outside sales employees. Section
13(a)(1) and Section 13(a)(17) also exempt certain computer
employees. To qualify for exemption, employees generally must meet
certain tests regarding their job duties and be paid on a salary basis at
not less than $455 per week. Job titles do not determine exempt status.
In order for an exemption to apply, an employee’s specific job duties
and salary must meet all the requirements of the Department’s regulations.
Salary Basis Requirement
To qualify for exemption, employees generally must be paid at not less
than $455 per week on a salary basis. These salary requirements do not apply
to outside sales employees, teachers, and employees practicing law or medicine.
Exempt computer employees may be paid at least $455 on a salary
basis or on an hourly basis at a rate not less than $27.63 an hour.
Being paid on a “salary basis” means an employee regularly receives
a predetermined amount of compensation each pay period on a weekly, or less
frequent, basis. The predetermined amount cannot be reduced because of variations
in the quality or quantity of the employee’s work. Subject to exceptions
listed below, an exempt employee must receive the full salary for any workweek
in which the employee performs any work, regardless of the number of days
or hours worked. Exempt employees do not need to be paid for any workweek
in which they perform no work. If the employer makes deductions from an
employee’s predetermined salary, i.e., because of the operating requirements
of the business, that employee is not paid on a “salary basis.”
If the employee is ready, willing and able to work, deductions may not be
made for time when work is not available.
Circumstances in Which the Employer May Make Deductions from Pay
Deductions from pay are permissible when an exempt employee: is absent
from work for one or more full days for personal reasons other than sickness
or disability; for absences of one or more full days due to sickness or
disability if the deduction is made in accordance with a bona fide plan,
policy or practice of providing compensation for salary lost due to illness;
to offset amounts employees receive as jury or witness fees, or for military
pay; or for unpaid disciplinary suspensions of one or more full days imposed
in good faith for workplace conduct rule infractions (see Company Policy
on penalties for workplace conduct rule infractions). Also, an employer
is not required to pay the full salary in the initial or terminal week of
employment; for penalties imposed in good faith for infractions of safety
rules of major significance, or for weeks in which an exempt employee takes
unpaid leave under the Family and Medical Leave Act. In these circumstances,
either partial day or full day deductions may be made.
Company Policy
It is our policy to comply with the salary basis requirements of the FLSA.
Therefore, we prohibit all company managers from making any improper deductions
from the salaries of exempt employees. We want employees to be aware of
this policy and that the company does not allow deductions that violate
the FLSA.
What To Do If An Improper Deduction Occurs
If you believe that an improper deduction has been made to your salary,
you should immediately report this information to your direct supervisor,
or to [insert alternative complaint mechanism(s)].
Reports of improper deductions will be promptly investigated. If it is
determined that an improper deduction has occurred, you will be promptly
reimbursed for any improper deduction made.
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