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Counting Bonuses Toward the New FLSA Salary Level: Much Ado About Nothing or Radical Break From the Past?

5.16.16

The article, “Counting Bonuses Toward the New FLSA Salary Level: Much Ado About Nothing or Radical Break From the Past?” featured on the Xpert HR Blog, discussed how the US Department of Labor (DOL) is expected to issue final regulations that will raise the minimum weekly salary level from $455 to somewhere around $970.

John Thompson discussed why this new proposal isn’t really a change in any meaningful respect.

 He observed, “There is already a way to accomplish much the same thing.”

Specifically, an employer could pay at least $970 per week (or whatever the actual minimum weekly salary is when the new regulations come out) on a salary basis as a guaranteed draw or advance against incentive-based compensation.

The DOL has recognized this practice for several decades, most recently in an opinion letter from 2006.

As John noted, a guaranteed draw or advance is effectively no different from an employer counting incentive-based compensation towards the minimum salary level. If the $970 salary level is an incontrovertible floor, it’s irrelevant whether incentive-based compensation accounts for 10% or 100% of the $970; it’s all the same pot of money in the end.

To read the full article, please visit Xpert HR Blog.

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