Unlike hourly employees who are paid by the hour, a salaried employee receives a set wage each pay period. This amount can be all or part of her pay, but it must be an amount that she can count on. The Fair Labor Standards Act, or FLSA, which governs federal wage laws, sets the standards for salaried employees.
The majority of salaried employees are classified as exempt. Exempt means the employee is exempt from the FLSA overtime, and in some cases, minimum-wage laws. The employer cannot label an employee as exempt simply because it wants to. The employee must satisfy the FLSA salary and job-duties test to qualify as such. For example, an administrative employee who earns a salary of at least $455 per week and performs the FLSA job duties specific to her position is exempt. A salaried employee who does not qualify for exempt is nonexempt and, therefore, qualifies for overtime.
A salaried employee is entitled to his full pay, whether or not he the works the entire day or week. However, if he does no work at all in the work week, the employer does not have to pay him for that week. As long as he is ready, willing and able to work, he is entitled to his full salary, regardless of whether or not work is available. The employer divides the employee’s annual salary by the number of pay periods, to arrive at his salary per pay period. The employee’s take-home salary generally stays constant, unless he has a pay or deduction change.
In some instances, the employer can dock a salaried employee’s pay. If she takes more benefit days – offered under an established company policy – than she has, the employer can deduct for the overage. It can also deduct for unpaid leave taken under the Family Medical Leave Act, or FMLA; to offset jury duty or witness fees paid to the employee; and for unpaid suspension, such as if the employee violates a conduct policy. The employer does not have to pay full salary if a newly hired or terminated salaried worker does not work out the entire pay period. Improper deductions include docking the employee’s pay because the business was closed because of inclement weather and making partial day deductions because she had to attend a parent-teacher conference. The employer can make permissible deductions only in full-day increments.
Employers who habitually make improper deductions from a salaried employee’s pay can lose the exemption. Consequently, the employee would be classified as nonexempt and qualifies for overtime. The FLSA does not forbid employers from requiring salaried employees to punch a time clock.