05

Salary basis, deductions, and the highly compensated employee test

The exemption tests in earlier chapters all assume the salary was paid correctly — this chapter is about what “correctly” means and what happens when it isn’t.

In this chapter

• +Salary basis means a fixed amount the employee can count on every workweek, not reduced for how much or how well the work got done.
• +Only a short, specific list of deductions can be taken from an exempt employee’s pay without breaking salary basis — everything else risks the exemption.
• +A pattern of improper deductions can cost the exemption for an entire job classification, but a genuine mistake with prompt reimbursement usually doesn’t.