The FLSA minimum compensation threshold for white-collar overtime exemptions. Employees must earn at least $684 per week ($35,568 annually) to be exempt from overtime, regardless of job duties.
Why Salary Level Test matters for employers
The current minimum salary threshold of $684 per week was set in 2020. Employees earning below this amount cannot be classified as overtime-exempt under the white-collar exemptions regardless of their job duties. The salary must be paid on a salary or fee basis, not hourly. Up to 10% of the required salary level may be satisfied by nondiscretionary bonuses and incentive payments paid at least annually.
The DOL periodically updates the salary threshold. Employers must monitor regulatory changes and adjust compensation or reclassify employees accordingly. Keeping non-exempt employees who earn below the threshold classified as exempt exposes the employer to FLSA back pay, liquidated damages, and attorney fees.
How BEG handles Salary Level Test for clients
BEG Managed Payroll handles Salary Level Test as part of a fully managed payroll service at $25-$45 per employee per month. Clients do not need to track compliance rules, filing deadlines, or calculation methods related to Salary Level Test on their own. Everything is included. Learn about BEG Managed Payroll.
Frequently asked questions
Do employers have to manage Salary Level Test themselves?
No. A managed payroll provider handles Salary Level Test as part of full-service payroll. BEG manages this for clients at $25-$45 PEPM with no system migration required.
What happens if Salary Level Test is handled incorrectly?
Errors related to Salary Level Test can trigger IRS penalties, state agency assessments, or employee disputes. Catching and correcting errors before filing is far less costly than after-the-fact corrections.
How does BEG handle Salary Level Test for managed payroll clients?
BEG tracks, calculates, and remits everything related to Salary Level Test as part of fully managed payroll. Clients do not need to monitor compliance -- that is included in the service at $25-$45 PEPM.
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About the author
Anthony Moretti is VP of Sales at Business Executive Group, where he builds BEG's managed payroll and HR service verticals for employers across Dallas-Fort Worth and nationwide. He writes the BEG Payroll Glossary to give employers plain-English answers on payroll and compliance.
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