Salary Basis
The Salary Basis test is just one of several tests that must be passed if an employee is classified as a "salary exempt" worker instead of an "hourly" worker. Because this test can be quite confusing, we wanted to share the following summary to help you understand how this it works:
To pass the "salary basis" test, your "salaried" worker must:
- Be paid once a week or less often (they cannot be paid by hour or by day);
- Earn a minimum annual salary of at least $43,888 per year (this amount will increase to $58,656 on Jan. 1, 2025); and
- Receive the same amount of base salary in each paycheck (the amount cannot go up and down depending on the number of hours they work or the quality/quantity of their work).
If your "salaried" employee does not satisfy each one of these requirements, they may be misclassified and could be eligible for overtime wages.
If you have any questions about the Salary Basis test, give us a call!
