Fee Basis

Under the Fair Labor and Standards Act (FLSA) most employees who are exempt from overtime pay are required to be paid on a salary or fee basis. Fee basis pay, as defined by the Fair Labor and Standards Act (FLSA), is an agreed upon amount or wage paid for a job, regardless of the time it takes the employee to finish the job. Although paying on a fee basis may be similar to what is termed piece work payments, there are some distinctions.

For instance, a fee is paid for work which may be unique, but it is not generally a series of jobs repeated over and over indefinitely. Fee basis pay is not, however, paid based on the number of hours or days worked by the employee. Fee basis pay is driven by payment for a single task. Determining if fee based pay is sufficient Workers may be considered exempt even if they are paid a fee rather than a salary. Employers, however, will have to verify that their paid will equal at least $455 per week.

To verify that the fee paid meets the minimum required amount for the exemption the employer will have to calculate the amount of time the employee worked to complete the job and verify that their payment rate would have been at least $455 per week if the employee worked 40 hours. For example, if a writer completed an article in 20 hours and was paid $250 then the minimum amount which must be paid for 40 hours of work would equal $500.

The frequency of payment also will not matter. For example, if the writer is paid on a weekly basis they would be paid $500. If the payment is made twice a month, however, they must be paid $1000. To summarize, administrative and professional employees may be paid on a fee basis, but the payment must be equal to $455 a week and the job must be “unique in nature with varying compensation amounts as opposed to routine and indefinite tasks (piece meal) that are compensated at the same rate each time.”