Mass-Peculiarities: An Employers Guide to Wage & Hour Law in the Bay State 2022 Edition

84 | Massachusetts Wage & Hour Peculiarities, 2022 ed. © 2022 Seyfarth Shaw LLP 1. Minimum Compensation Requirements Generally speaking, employees working in an executive, administrative, or professional capacity are exempt from the FLSA’s minimum wage and overtime pay requirements if paid a minimum salary (as of the publication date, $684.00 per week or $35,568 annually) on a “salary basis.” 450 This minimum salary threshold became effective on January 1, 2020 after the DOL’s proposed rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees (“the DOL’s 2019 Final Rule”) became final. 451 If an employee makes less than the minimum salary amount, the employee generally cannot qualify as exempt even if he or she meets the other requirements for a white collar exemption. If the employee’s salary meets or exceeds this threshold, the employee is exempt only if he or she also meets the salary basis test requirements and the duties requirements of one of the white collar exemptions. 2. Salary Basis Test An employee is paid on a salary basis if in every pay period the employee receives “a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.” 452 An employer may pay an employee additional compensation without losing the exemption if the employment arrangement also includes a guarantee of the minimum weekly required amount on a salary basis. 453 Subject to the exceptions listed below, an exempt employee must receive his or her full salary for any week in which the employee performs any work , regardless of the number of days or hours worked. 454 An employer does not need to pay an employee for any week in which the employee performs no work. In addition, an employer is not required to pay an exempt 450 These requirement s do not apply to out side sales employees, teachers, certain computer professionals or employees pract icing law or medicine. 29 C.F.R. §§ 541.500(c), 541.303(d), 541.400(b), 541.304(d). Computer professionals may be paid either $684.00 or more per week on a salary or fee basis (or $455.00 per week for employees in the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands, or $380.00 per week for employees in American Samoa, who are not employed by the federal government ) or at least $27.63 per hour. 29 C.F.R. § 541.400(b). 451 Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees , 84 Fed. Reg. 51,230 (Sept . 27, 2019); 29 C.F.R. § 541.600(a). The current rule does not change the dut ies test . See 84 Fed. Reg. 51,245. 452 29 C.F.R. § 541.602(a). 453 For example, an employee may receive a commission of one percent on sales and remain exempt as long as the employee is guaranteed at least $684 per week on a salary basis. 29 C.F.R. § 541.604(a); Guardia v. Clinical Support Options, Inc. , 25 F. Supp. 3d 152 (D. Mass. 2014) (addressing same issue under prior salary threshold). 454 29 C.F.R. § 541.604(a). The First Circuit held that employees were paid on a salary basis even though they were paid under a compensat ion scheme where “ their earnings equaled the number of hours they billed to client s mult iplied by an hourly rate between $40 and $60” because they were guaranteed a minimum weekly salary of $1,000, regardless of hours billed. Litz v. Saint Consulting Grp Inc., 772 F.3d 1, 2-5 (1st Cir. 2014). The plaintiffs argued that this did not const itute payment on a salary basis, cit ing language on paystubs and several communicat ions from the employer implying that a circumstance could arise where the guarantee would not have been paid. Id . at 4-5. The First Circuit held that this argument “simply ignores the economic reality of the guarantee . . . . The fact that the [actual] pay was usually—but not always—high enough to render the guaranteed st ipend unnecessary hardly means that the guarantee was not part of the employee’s compensat ion.” Id . at 5.