The Fair Labor Standards Act describes payment on a salary basis as a predetermined amount that an employee receives regularly on a weekly or less frequent basis, such as biweekly, semimonthly or monthly. However, state laws typically dictate minimum paydays for salaried employees.
You may pay salaried employees more often than a state-mandated minimum payday, but not less frequently. For example, if the minimum payday is biweekly, you may pay weekly, but not semimonthly or monthly. Salaried employees fall into two groups: exempt and nonexempt. While most salaried employees are exempt, which means they are excluded from FLSA overtime and minimum wage provisions, some are nonexempt, which means they are subject to the act’s overtime and minimum wage provisions. If the state says you may pay salaried employees monthly, clarify whether that rule pertains to both exempt and nonexempt salaried employees.
As of 2013, the following states have monthly minimum paydays: Alaska, Colorado, Delaware, Hawaii, Idaho, Illinois, Iowa, Kansas, Michigan, Minnesota, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Texas, Virginia, West Virginia and Wisconsin. In some cases, only specific salaried employees can be paid monthly. For example, in Illinois, Nevada, New Mexico and Virginia, you may compensate only executive, administrative and professional personnel monthly; these employees are usually salaried workers who are exempt under the FLSA. In Texas, only exempt employees can be paid monthly; nonexempt employees must be paid at least semimonthly. Therefore, in Texas, you may not pay a salaried employee monthly if she does not qualify as exempt under the FLSA.
The FLSA does not set minimum paydays; however, it requires employers to compensate employees by the established regular payday. If the state does not say when employees should be compensated, under federal law, you must pay them by the established payday. As of 2013, Alabama and South Carolina do not specify minimum paydays. In Nebraska and Pennsylvania, paydays are left up to the employer. North Carolina does not specify minimum paydays; however, according to the U.S. Department of Labor, Wage and Hour Division, paydays may be weekly, biweekly, semimonthly or monthly.
Payday laws can be complex, so consult your state labor department or regional U.S Department of Labor, Wage and Hour Division for clarification. The department can help you determine whether you should classify a salaried employee as exempt or nonexempt and how frequently you must pay the employee.