The salary basis test is a collection of requirements that make an employee exempt from eligibility for overtime. 

This new rule – which is now in effect as of January 1 – means that employees making up to $35,568 per year are now eligible for overtime. On a weekly basis, employees making up to $684 per week are eligible for overtime.

Employees labeled as “non-exempt” are those whose wages fall below a certain threshold. To date, the overtime income threshold stands at $35,568/year or $684/week. This means that those earning less than $35,568/year or $684/week automatically qualify for time and a half wages for any hour that falls beyond the 40 hour work week.

If an employee makes more than the $35,568/year threshold, they may still be entitled to overtime pay. The salary basis test consists of stipulations that may exempt an employee from being eligible for overtime pay.

If this threshold has been passed, the next step is to assess the duties of the position in order to see if they qualify as a white collar exemption. What are white collar exemptions? These exemptions relieve employers from paying overtime to certain employees based on regularly performed duties. White collar exemptions include: executive, administrative and professional workers.

Executive exemption

To qualify, an employee must meet all of the following criteria:

⇨ Compensation: The employee must be paid on a salary basis earning no less than $684 per week.

⇨ Duties: The employee must routinely perform managerial duties and oversee 2+ full-time employees or full-time equivalents. 

⇨ Authority: The employee should be able to hire, fire, advance, promote or make any change to another’s employee status. This includes employees who can strongly influence another’s decision to alter another employee’s status.

Administrative exemption

To qualify under the salary basis test, an employee must meet all of the following criteria:

⇨ Compensation: The employee must be paid on a salary basis (or fee basis as defined in regulations) earning no less than $684/week.

⇨ Duties: The employee’s primary responsibilities must be office or non-manual work directly related to the management or general business operations of the employer or company’s customers.

⇨ Authority: Authority: The employee has the ability to use discretion for important company decisions.

Professional exemption

Professional exemptions can fall into two categories: learned professional exemptions and creative professional exemptions. To qualify as a learned professional under the salary basis test, an employee must meet all of the following criteria:

⇨ Compensation:  The employee must be paid on a salary basis (or fee basis as defined in regulations) earning no less than $684/week.

⇨ Duties:  The employee’s primary responsibilities must require advanced knowledge and should be in the field of science or learning.

⇨ Credentials:  The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

⇨ Authority: The employee’s position requires consistent decision-making discretion.

 

To qualify as a creative professional under the salary basis test, an employee must meet all of the following criteria:

⇨ Compensation: The employee must be paid on a salary basis (or fee basis as defined in regulations) earning no less than $684/week.

⇨ Duties: The employee’s responsibilities are predominantly of creative nature. This includes duties that require invention, imagination, originality or talent in a “recognized field” of art or creativity.