It is a legal requirement under the Fair Labor Standards Act (FLSA) in the United States. It determines whether an employee is exempt or non-exempt from receiving overtime pay. The test focuses on the salary basis of an employee's compensation. To meet the Salary Basis Test, an employee must be paid a predetermined and fixed salary that is not subject to reduction based on the quality or quantity of work performed. This means that exempt employees must receive their full salary regardless of the number of hours worked or the quality of their work. Specific criteria must be met for an employee to be considered exempt under the Salary Basis Test. These criteria include 1. Minimum salary threshold: The employee must be paid a salary that meets or exceeds a certain minimum threshold set by the Department of Labor. As of January 1, 2020, the minimum salary threshold is $684 per week ($35,568 per year). 2. Salary basis: The employee's salary must be paid weekly or bi-weekly and not be subject to reduction based on variations in the quantity or quality of work performed. 3. No deductions: Except for limited exceptions, no deductions can be made from an exempt employee's salary for absences caused by the employer or due to the operating requirements of the business. It's important to note that meeting the Salary Basis Test alone does not automatically classify an employee as exempt from overtime pay. There are additional tests, such as the Duties Test, which assesses whether an employee's job duties meet specific criteria for exemption. Employers must comply with all applicable wage and hour laws and consult with legal professionals or labor experts to determine proper classification and adherence to regulations.
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