by Matthew A. Kaufman, Esq.
A very important labor law issue is whether an employee is a "salaried" employee. Under California labor law (and federal law generally), exempt employees must be salaried. Under the "salary basis test", a salaried employee has the following characteristics:
Regularly receives a predetermined amount of compensation each pay period (on a weekly or less frequent basis).
A salaried employee's compensation cannot be reduced because of variations in the quality or quantity of the work performed.
Must be paid the full salary for any week in which the employee performs any work.
Does not fall within the many exceptions to the rule, such as the "safe harbor defense", the "fee basis test", or is in an excluded type of work.
Many rights depend upon whether an employee is salaried. This includes whether an employee can receive overtime pay, computation of FMLA leave, or whether the employer can make certain deductions made from a commission.
There are many exceptions to the salary basis text, and there's much to analyze in the Department of Labor's changes to its regulations made on August 23, 2004. The summary above is intended to explain the highlights of the law in California. It's similar, but not the same as federal law.
Read more in-dept definitions for salaried employees HERE.
