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Thursday, May 7, 2026

Wage Hour – Designed for the 1920s, Applied in the 21st Century - JD Supra

The fundamental premise of the Fair Labor Standards Act (FLSA) is that all employees are covered by the base requirements of the Act. This includes being paid minimum wage for every hour worked and time and one-half for all overtime. The FLSA is a statute of inclusion, which means that all employees are covered unless they fit within specific, narrowly defined exemptions. One problem has been that it is a law designed for the Model T manufacturing plant and has grown sometimes in haphazard and inconsistent ways.

Exemptions

Various exemptions exist, most commonly used are executive, administrative, and professional exemptions. (See Exempt or Not Exempt - That is the $47,476 Question addressing these exemptions as well as the exemption for highly compensated workers.) However, for any exemption to apply, the standard test must be met:

  • all payments must be made on salary basis
  • the amount paid annually must meet the specified minimum
  • the employee must perform duties that fit within the exemption as their primary duties.

The issue of salary basis can be very complicated for employers. To be truly paid on a salary basis, only limited deductions may be made from an employee’s pay (see Fact Sheet No. 17G DOL.gov). The DOL makes it clear that employees must receive “a predetermined amount of compensation each pay period on a weekly or less frequent basis.” Additionally, this amount cannot be reduced due to the quality or quantity of the employee’s work, and the employee “must...



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