Do I Have a “Minimum Guarantee” under the FLSA?

As we have noted in previous blog posts, the Fair Labor Standards Act (FLSA) (the “Act”) is a federal law that guarantees Texas employees certain workplace rights. Among those are the right to be paid at or above the federal hourly minimum wage and the right to collect overtime pay for any hours worked over 40 per week. While the FLSA governs most jobs in the United States, some employees are excluded from the Act’s overtime rules. These employees are referred to as “exempt” employees.

Determining whether an employee is exempt or non-exempt under the FLSA can be tricky, and may depend on how much an employee is paid, how they are paid, and what type of work they perform. As a general rule, to be considered exempt, an employee must meet each of the following three criteria:

  • the employee is paid at least $23,600 per year ($455 per week);
  • the employee is paid on a salary basis; and
  • the employee performs exempt job duties.

There are frequently disputes as to an employee’s exemption status. Most often, these disputes will likely be centered around whether the employee is paid on a salary basis.

When most people think of a salary, they think of an employee being compensated based on the expectation they will perform a particular job, regardless of how many hours that job requires. Thus, salaried employees are paid for any week they work, irrespective of how long they work that week. However, there may be situations where an employee’s compensation varies based on the number of hours worked or the employee’s level of performance. This frequently arises in positions that offer bonuses, commission, or other incentives to perform at or above a certain level.

Under 29 CFR § 541.604, there are certain circumstances in which an employer can provide an exempt employee additional compensation without changing the employee’s status from exempt to non-exempt. This is referred to as a “minimum guarantee.” For example, this may be the case when an exempt employee is guaranteed a minimum weekly salary regardless of the amount or quality of work performed, but is also provided a bonus on top of that weekly salary. The bonus could be a commission based on sales or extra payment for those hours worked over 40 hours per week. Payment of the bonus would not change an exempt employee’s status to non-exempt so long as that minimum guarantee was provided to the employee.

The nuances of the FLSA and the factors that go into whether an employee is exempt or non-exempt are often complex.

Contact a Dedicated Texas Employment Lawyer

If you are currently involved inor have questions regarding your employment status, contact our dedicated team of attorneys at Rob Wiley P.C. We have assembled an experienced team of compassionate attorneys who are proud to stand up for the rights of Texas employees. To learn more, call 214-528-6500 to schedule a consultation.

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