Read the facts of this real-life case and decide: Who won?

The facts:

The employee worked as a mortgage underwriter. Under the company’s payment system, underwriters were paid a salary of at least $48,000 a year and classified as exempt. They had quarterly reviews, and their salaries could go up or down, depending on how many loans the employee had processed — but the pay could never fall below the $48,000 floor. The employee sued for unpaid overtime, claiming the wage policy failed to meet the salary basis test required for OT exemption.

The employer said:

The employees were guaranteed a salary that complied with the FLSA’s exemption rules. Wages could go up or down based on performance, but employees always made at least $48,000.

Who won the case?

Answer: The employer.

Why: Most of the OT exemption rules require that employees are paid based on a predetermined salary and that their pay isn’t reduced based on quality or quantity of work.

However, the FLSA also makes an allowance for employees who receive a “minimum guarantee plus extras” — for example, a salaried employee can still receive variable bonuses or commissions and be considered exempt.

In this case, the $48,000 was the guaranteed minimum, and anything beyond that was an “extra.” The court ruled the payment practice met the salary basis test, and the employee’s case was thrown out.

Cite: Havey v. Homebound Mortgage, Inc.