Payment on a Fee Basis Under the FLSA

Under the Fair Labor Standards Act (FLSA) and Minnesota state law, administrative and professional employees may be paid on a “fee basis” rather than on a salary basis.  An employee is considered to be paid on a fee basis when the employee is “paid an agreed sum for a single job regardless of the time required for its completion.”  Fee basis payments are similar to piecework payments except that a “fee” is typically paid for a unique job as opposed to a “a series of jobs repeated an indefinite number of times . . . for which payment on an identical basis is made over and over again.”  Payments based on the number of hours or days worked instead of the accomplishment of a single task are not considered payments on a fee basis.  See 29 C.F.R. § 541.605(a).

To determine whether a fee payment meets the minimum amount required for the administrative and professional exemptions under the FLSA, the amount paid to the employee is tested by determining the time worked on the job and whether the fee payment is at a rate that would satisfy the minimum salary requirements if the employee worked 40 hours.  See 29 C.F.R. § 541.605(b).

About Michael Miller

Michael is a Chambers-rated attorney in Briggs and Morgan's Employment, Benefits, and Labor group and is head of the firm’s Employment Law Counseling and Compliance practice group. He has 25 years experience counseling employers to prevent unwanted litigation and advises companies of ongoing changes in federal, state and local employment law. Michael advises employers in all areas of employment law including discipline and discharge, leaves of absence, wage and hour compliance, non-compete and confidentiality agreements, affirmative action plans, background checking, and drug/alcohol testing. For Michael's full bio, click here.

Posted on November 14, 2011, in Wage and Hour and tagged . Bookmark the permalink. Leave a comment.

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