BOURGON HR Solution Blog

Payroll Practices: A look at the salary basis factor

Posted by Mike Bourgon on Sun, Sep 28, 2008

In order to apply a white collar exemption, employees must receive and be paid a salary. In order to ensure the appropriate handling of salary, the following questions need to be considered.

  • Does the organization have a written policy prohibiting improper salary deductions?
  • Does the automated payroll system have electronic alerts to prevent salary docking?
  • Is there a written safe harbor policy calling for the investigation complaints and timely reimbursing of improper deductions?
  • Is there an automated system for requesting time off, paid or unpaid? Are there review levels? Are there rules governing unpaid time off and if so is the unpaid time off limited to full-day increments?
  • Are employee pay stubs or earning statements understandable as to how compensation is calculated? For salaried exempt employees, do they reflect a predetermined salary that is regularly paid?