Federal

Salary employee requirements

January 6, 2026federal-laws

Salary Employee Requirements (Federal): Minimum Salary Pay, Exemptions, and Compliance

HR teams and business owners often search for “salary employee requirements” because they want to know one thing: when can an employee be paid a salary, and what does federal law require to stay compliant? Under U.S. federal labor law, paying someone a salary does not automatically make them exempt from overtime—or compliant with minimum wage and salary rules. This guide explains the key salary laws under the Fair Labor Standards Act (FLSA), including minimum salary pay, overtime eligibility, and practical steps to reduce wage-and-hour risk.

For broader context on federal rules beyond pay, see SwiftSDS’s overview of employment basics.

What federal law says about salaried employees (FLSA overview)

The main federal law concerning salaried employees is the Fair Labor Standards Act (FLSA) (29 U.S.C. § 201 et seq.) and the U.S. Department of Labor regulations at 29 C.F.R. Part 541 (exemptions) and related wage/hour rules.

Under federal labor laws for salaried employees, there are two big categories:

  • Nonexempt salaried employees: Can be paid a salary, but must still receive overtime (generally 1.5×) for hours over 40 in a workweek and must meet minimum wage requirements.
  • Exempt salaried employees: May be exempt from overtime only if they satisfy specific tests (salary basis, salary level, and duties).

Even if you pay a fixed weekly salary, you still must track compliance with wage and hour requirements. For related wage mechanics (and how hourly standards interact with pay plans), review SwiftSDS’s Hourly compensation requirement.

The core “salary employee requirements” under the FLSA

1) Salary basis requirement (the “salary basis” test)

To qualify for most “white-collar” exemptions (executive, administrative, professional), an employee generally must be paid on a salary basis, meaning they receive a predetermined amount each pay period that is not reduced because of variations in the quality or quantity of work (subject to limited permitted deductions).

Actionable compliance tips

  • Put the salary basis policy in writing in your handbook.
  • Train payroll on when deductions are allowed (improper deductions can jeopardize the exemption).
  • If a deduction mistake happens, correct it promptly and document the fix.

2) Minimum salary pay (the “salary level” test)

Many employers searching “minimum salary pay” are really asking: What is the minimum salary for exempt status? Under federal regulations, most white-collar exemptions require meeting a minimum weekly salary level set by the DOL.

Important: Salary thresholds can change based on federal rulemaking. Always confirm the current federal salary level before relying on an exemption.

Actionable compliance tips

  • Audit exempt roles at least annually (or whenever DOL rules change).
  • Build alerts into HR/payroll processes to re-check thresholds during compensation planning.
  • If you operate in multiple states, compare federal thresholds to state requirements (states may be higher).

To compare how state wage rules can affect your plan, see pay regulations and payroll laws.

3) Duties test (what the employee actually does)

Under the FLSA, job titles do not determine exempt status. The employee’s primary duties must meet the regulatory definition for an exemption category, such as:

  • Executive: managing the enterprise/department, directing at least two full-time employees (or equivalent), and having meaningful input into hiring/firing decisions.
  • Administrative: office/non-manual work directly related to management or general business operations and exercising discretion and independent judgment on significant matters.
  • Professional: advanced knowledge in a field of science/learning, typically acquired by prolonged specialized instruction (or creative professional work).
  • Computer employee exemption and outside sales exemption have their own criteria.

Actionable compliance tips

  • Maintain accurate job descriptions that reflect actual duties.
  • Re-evaluate exemptions when roles change (re-orgs, promotions, new tech, staffing shifts).
  • Document the exemption rationale (salary basis + salary level + duties) for each exempt employee.

Minimum wage and salary employees: what “salary” does not change

A common misconception is that salary paid employee laws allow employers to ignore minimum wage and overtime. Not so.

Salaried but nonexempt: overtime still applies

A nonexempt employee can be paid a salary, but you must still:

  • Pay overtime for hours over 40 in a workweek (unless a specific exemption applies)
  • Ensure the salary covers at least minimum wage for all hours worked in that workweek

Practical example: If a nonexempt salaried employee works 50 hours, you must calculate the “regular rate” and pay overtime premium on top of the salary (or structure a lawful pay plan that accomplishes the same result).

Recordkeeping still matters

The FLSA requires employers to maintain certain payroll records. For nonexempt workers, that often includes hours worked each day and each workweek.

Actionable compliance tips

  • Require timekeeping for all nonexempt employees, even if salaried.
  • Review off-the-clock risks (remote work, after-hours emails, meal breaks).
  • Implement a clear approval process for overtime—but pay it even if not preapproved (then address policy violations separately).

Minimum compensation requirement per year: how to think about annualized salary

Many HR leaders search “minimum compensation requirement per year.” Under federal salary laws, thresholds are typically expressed per week. Employers often convert to an annual figure for budgeting:

  • Annualized salary = weekly threshold × 52 weeks

Compliance note: If an employee’s pay fluctuates during the year (unpaid leave, partial-week deductions, reduced salary), annualizing can hide noncompliance. The safest practice is to ensure the employee meets the salary level each relevant pay period, consistent with the regulations.

Posters and notice requirements tied to salary and wage compliance

Even when your pay practices are correct, missing required postings can create compliance exposure. The U.S. DOL requires workplaces covered by the FLSA to display the federal minimum wage poster.

For a full list of required federal posters, start with Federal (United States) Posting Requirements.

Location-specific salary pay laws: why state rules still matter

This page focuses on federal labor laws salaried employees must follow, but many states (and some cities/counties) impose stricter requirements—especially around overtime, pay frequency, and minimum wage.

To stay compliant across jurisdictions, review posting and pay obligations where you operate:

Actionable compliance tips

  • Build a state-by-state exemption and payroll compliance matrix.
  • If you have remote employees, apply rules based on the employee’s work location.
  • Re-check local rules when expanding operations or hiring in a new city.

HR compliance checklist for salary paid employee laws

Use this quick checklist to audit your salary employee requirements:

  1. Classify correctly: Exempt vs. nonexempt based on duties—not title.
  2. Verify salary basis: Confirm pay practices avoid improper deductions.
  3. Confirm minimum salary pay: Ensure exempt employees meet the current federal salary threshold (and any higher state/local thresholds).
  4. Track time for nonexempt staff: Salaried nonexempt still need overtime compliance and accurate time records.
  5. Post required notices: Maintain current FLSA and any state/local posters.
  6. Document decisions: Keep written exemption analyses and job descriptions.
  7. Train managers: Prevent off-the-clock work and misclassification drift.

For broader workplace rights context that often intersects with wage-and-hour concerns, see 5 rights of workers.

FAQ: Salary employee requirements

Are salaried employees automatically exempt from overtime?

No. Under federal law concerning salaried employees, salary alone does not create an exemption. Most exemptions require salary basis + minimum salary level + qualifying duties.

What happens if an exempt salaried employee doesn’t meet the minimum salary pay threshold?

If the employee doesn’t meet the salary level requirement (and no alternative exemption applies), they may be treated as nonexempt, meaning you may owe overtime and must comply with timekeeping and minimum wage rules.

Do I need to post the FLSA notice even if everyone is salaried?

Often, yes. Many employers are covered by the FLSA and must display the required poster regardless of whether employees are paid hourly or salary. Keep the current version posted: Employee Rights Under the Fair Labor Standards Act.

SwiftSDS helps employers track federal and state posting requirements and maintain labor law compliance across locations. This article is for general informational purposes and is not legal advice.