US Federal Salaried Employees' Laws

April 11th 2024

US federal salaried employees’ laws establish standard regulations that protect employees’ rights to fair compensation. Understanding the US federal laws governing salaried employees goes beyond mere legal compliance – it empowers employees to navigate their professional paths confidently and securely.

While some states have come up with their own set of standards and exceptions for salaried employees, the federal laws act as a solid base, and this article aims to guide employees towards understanding their entitlements and obligations under this federal umbrella.

This article covers:

Salaried Employees in the US

Salaried employees in the United States receive fixed compensation on a regular basis. Paychecks are often scheduled on a weekly, biweekly, or monthly basis.

Unlike hourly employees, the income of salaried employees remains fixed and consistent, regardless of the quantity and quality of work performed within a pay period. In other words, their income reflects the intrinsic value and responsibilities of their job.

According to the Fair Labor Standards Act (FLSA), all non-exempt employees are entitled to a minimum wage of $7.25 per hour. They are also entitled to overtime pay at a minimum rate of 1.5 times the regular rate for any work hours undertaken beyond the established 40-hour week threshold.

Download U.S. Minimum Wage 2024 Poster now.

Under the FLSA, an employee is considered exempt from wage and hour laws if they are paid on a salary basis and receive a minimum of $684 per week.

Exempt vs. Non-Exempt Salaried Employees in the US

All employees in the United States must classify the job roles of their employees as exempt or non-exempt. Misclassifying employees can result in civil penalties.

Under the FLSA, exempt employees earn a current minimum wage of $684 weekly or $35,568 annually and are paid on a salaried basis. These employees perform high-level duties; they could be in administrative, executive, professional, computer, or outside sales positions. The Department of Labor (DOL) has a list of tests that can help employers determine who meets the criteria for exempt employees.

Non-exempt employees are generally paid an hourly rate, but they can also be paid on a salary, commission, or piece-rate basis. What sets them apart from exempt employees is that they are eligible to receive overtime pay.

Download U.S. FLSA Exemption Salary Threshold 2024 Poster now.

Federal Wage and Hour Regulations in the US

The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked, including overtime pay for working more than 40 hours per week. However, exempt employees are not eligible for overtime compensation under the FLSA.

The DOL amended the new federal overtime regulations of the FLSA in 2019, and they went into effect in January 2020. The included revisions are as follows:

  • “White collar” employees minimum threshold increased from $455 per week ($23,660 annually) to $684 weekly ($35,568).
  • The total annual compensation requirement for highly compensated employees rose from $100,000 to $107,432.
  • Employers may employ bonuses and incentive pay (including commissions) to satisfy up to 10% of the standard salary level.

To ensure compliance with federal wage and hour regulations, employers need to implement clear policies and practices. Time tracking software is an effective system to log hours and wages, and assists companies in collecting and reviewing timesheets, calculating employee compensation under federal and state laws and employment contracts, and ensuring that all employees adhere to the agreed-upon working hours and breaks.

Overtime Eligibility for Salaried Employees in the US

Under some circumstances, salaried employees in the US are eligible for overtime pay. The FLSA considers certain employees exempt if they fall under these criteria:

  • Salary Basis Test: Employees receive a predetermined and fixed salary, regardless of the number of hours worked in a week.
  • Salary Level Test: Employees earn a baseline salary of at least $684 per week or $35,568 per year. Employers have to note that the US Department of Labor has proposed an increase for the minimum salary requirement, which may take effect sometime in 2024.
  • Duties Test: An employee’s primary job involve administrative, executive, and professional responsibilities.

Deductions, Benefits, and Protection of Salaried Employees in the US

Deductions from pay are item costs taken directly from an employee’s paycheck. The US federal law has a few restrictions when compared to some state laws. In the United States, taxes, court-ordered payments, insurance, and other contributions that benefit employees are permissible deductions.

According to the FLSA, employers can deduct the following from a salaried employee’s paycheck:

  • Vacation Pay: Salaried employees often have compensation or benefit packages that include vacation or sick leave. If their employment package grants this leave, then each full or partial absence day can be deducted from these days rather than from their salary.
  • Sick or Disability Absences: Employers can deduct absences from a salaried employee’s pay as stated on their employment package. However, if the employee is not granted paid sick leave, the employer can deduct the absence from their regular pay.
  • Healthcare: Under the Affordable Care Act and Employer Shared Responsibility Provisions, employers qualified as an Applicable Large Employer must offer affordable health coverage to salaried employees and their dependents.
  • Personal Absences: If there is no accrued leave under the employment contract, the employers have the right to deduct pay for absences other than sickness or disability.

Employers can also deduct pay for disciplinary suspensions if an employee violates workplace conduct rules (i.e., safety rules and conduct policies). Hence, employees should understand safety regulations to avoid violations that may endanger themselves, others around them, or the workplace.

Salaried Employees Leave Laws in the US

Employers in the United States are legally mandated to provide certain types of leave to their employees, while others are discretionary.

Mandatory leave includes advanced sick leave, which addresses severe health conditions and childbirth-related needs within specified time frames. Under the Family and Medical Leave Act (FMLA), eligible employees have the right to unpaid leave for up to 12 workweeks in 12 months due to medical reasons or to render care for family members.

Annual leave offers flexibility for vacations, personal commitments, and health-related issues, all subject to supervisor approval. Court leave ensures employees can fulfill their civic duties without financial hardship, with the necessary documentation provided.

Meanwhile, military leave supports employees fulfilling military obligations, while voting time leave encourages civic engagement. These leave options underscore the commitment of the federal government to support its workforce while balancing professional and personal responsibilities.

However, there are some types of leave that employers are not legally obligated to provide, including bereavement leave, vacation time, and holiday leave.

Salaried Employees’ Break Entitlements in the US

Under federal law, there is no requirement for employers to provide lunch or coffee breaks. However, some employers may choose to offer their employees a break to enhance productivity. If such breaks are provided, the company must establish guidelines for employees to observe.

Under the FLSA, employers are required to provide appropriate breaks for employees to express breast milk for their nursing child. This requirement applies for up to a year after the child’s birth if the employee needs to express milk. Employers must also provide a suitable workplace environment that is not a bathroom to ensure privacy from coworkers and the general public.

Final Thoughts

Salaried employees in the US should gain firm understanding of their rights in order to actively safeguard their welfare, mitigate the risks of potential wage violations and unfair labor practices.

For employers, being knowledgeable about US Labor Laws fosters a positive work environment. Given the complexities of employment legislation, seeking expert counsel or contacting the US Department of Labor can offer invaluable insights and assistance.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.