Salary Level Test

Reference Number: MTAS-963
Tennessee Code Annotated
Reviewed Date: July 26, 2018
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(NOTE: The U.S.. District Court for the Eastern District of Texas issued a preliminary injunction preventing the implementation of the revised FLSA overtime regulations. The case was brought by 21 states. The Obama Administration appealed the decision to the U.S. Court of Appeals for the Fifth Circuit. The 5th Circuit Court of Appeals granted a motion of the Trump Administration for an additional 60 days to determine its position on the appeal of the ruling by the District Court enjoining the FLSA overtime regulation. The Administration's decision was initially due by May 1st, 2017. The 5th Circuit granted another extension until June 30th. The Labor Department filed a brief with the Fifth Circuit Court of Appeals indicating that it will not defend the $913 salary rate and asked the Court to clarify its ability to set a salary level. The department has also issued a request for public comments. Until we hear more, continue to comply with the old salary level testing regulations.)

To qualify as an exempt executive, administrative or professional employee, an employee must be compensated on a salary basis at a rate of not less than $455 per week, exclusive of board, lodging or other facilities. The requirement will be met if the employee is compensated biweekly on a salary basis of $910, semimonthly on a salary basis of $985), monthly on a salary basis of $1,972) or annually on a salary basis of $23,660. The shortest period of payment that will meet this compensation requirement is one week. In the case of computer employees the compensation requirement also may be met by providing compensation on an hourly basis at a rate not less than $27.63 an hour or annually on a salary basis or $57,470.40. (29 C.F.R. § 541.400)

In the case of professional employees, an exception to the salary basis requirement is in effect. It does not apply to certain professionals. “Among those excluded are teachers (29 C.F.R. § 541.303(d)); employees who hold a valid license or certificate permitting the practice of law or medicine or any of their branches and are actually engaged in the practice; or to employees who hold the requisite academic degree for the general practice of medicine and are engaged in an internship or resident program.

An employee with total annual compensation of at least $100,000 is deemed exempt if the employee customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee. A high level of compensation is a strong indicator of an employee’s exempt status, thus eliminating the need for a detailed analysis of the employee’s duties. This exemption applies only to employees whose primary duty includes performing office or non-manual work. (29 C.F.R. § 541.601)


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