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Exempt employees and the reasonable relationship test

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in Centerpiece,Employment Law,Human Resources

By Alfred B. Robinson, Jr., Esq., Ogletree Deakins

In Opinion Letter FLSA 2018-25, issued in November 2018, the acting administrator of the U.S. Department of Labor’s Wage and Hour Division addressed the requirement in 29 C.F.R. Section 541.604(b) that a “reasonable relationship” must exist between an exempt employee’s guaranteed amount paid on a salary basis and the amount actually earned by the exempt employee.

Paid hourly, daily or by shift

The reasonable relationship requirement exists so an employer may compute an exempt employee’s earnings on an hourly, daily or shift basis without the employee losing exempt status or the employer violating the salary basis requirement.

In essence, when an employer compensates exempt employee on an hourly, daily or shift basis, a reasonable relationship must exist between the amount of compensation per week guaranteed to the employee and the amount of compensation the emp...(register to read more)

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