Salary Basis Test: When a Salaried Worker Is Still Owed Overtime

Not every salaried worker is exempt from overtime. California has strict requirements for the salary basis test, and employers who dock pay improperly can destroy the exemption and owe overtime for every hour worked.

The Salary Basis Requirement

To qualify as exempt, an employee must be paid a predetermined salary that is not subject to reduction based on the quality or quantity of work. An employer who docks a salaried employee’s pay for partial-day absences, slow weeks, or disciplinary reasons has violated the salary basis test — and may have made that employee non-exempt retroactively.

One improper deduction can collapse an exemption. Courts have found that a single improper dock, depending on circumstances, can render an employee non-exempt for the entire period of employment. Employers who casually deduct from salaried pay without understanding the rules create enormous retroactive liability.

The California Wage Theft Recovery System gives workers the exact tools and templates to document violations, calculate what they’re owed, and file the right claims at the right agencies — without paying an attorney to get started. Request your free evaluation here.