Employers may use nondiscretionary bonuses and incentive payments (such as commissions) paid on an annual or frequent basis, to satisfy up to 10% of the salary requirement.Īny employee who passes this test is one step closer to being classified as exempt. In order to pass the Salary Level Test, an employee must be paid on a salary basis of no less than $684 per week. While there are several categories of exempt workers, one thing the majority of them have in common is they must pass the Salary Level Test as part of their exemption requirements. Exempt EmployeesĪny employee who is classified as exempt is not subject to FLSA overtime and minimum wage requirements. The following sections will help employers determine the exemption status of employees, meaning which employees are exempt from minimum wage and overtime pay under the FLSA rules, and regulations. Even still, it continues to be one of the most common payroll mistakes employers tend to make. In fact, in the 2021 fiscal year, the DOL recovered over $230 million in total back wages due to the misclassification of workers. These penalties can be up to $1,000 per violation.

The FLSA is enforced by the Wage and Hour Division of the Department of Labor (DOL), whose duty is to recover back wages and assess penalties. A misclassification of a worker may lead to monetary consequences in the form of fines or penalties. Employers need to know which category each person working for them is. According to the Fair Labor Standards Act (FLSA), there are three different categories workers non-exempt employees, exempt employees, and independent contractors.

Penc meaning professional exempt