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What Is the Salary Basis Test?

Federal law states that as an employee, you’re considered eligible for overtime pay. That said, some requirements make it so that an employee is exempt from overtime pay. The salary basis test is the set of conditions that could result in an employee being exempt from this overtime pay.

The salary basis test states that each and every employee must receive a fixed salary. It should also be noted that this fixed salary has to be predetermined.

There are both permissible and non-permissible reductions that can leave the employee with a reduction in the salary basis pay.

What Are the Qualifications to Be a Salaried Employee?

As a salaried employee, you are paid a fixed amount by an employer. A salary is most likely a yearly wage rather than an hourly wage.

Salaried employees tend to be paid bi-weekly or monthly as opposed to hourly

In addition, salaried employees do not generally have to keep a timesheet, whereas hourly employees do. Salaried employees usually also qualify for exempt status, but hourly employees usually have non-exempt status.

What Is the Minimum Amount for Salary?

As of the 1st of January 2020, you must earn the equivalent of $684 a week to qualify – that’s $35,568 a year.

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See our full list of over 50 Small Business Terms here

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