Pay practice policy exempt employees

Rules governing exempt employee pay practices under FLSA
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I. Pay practice

The Fair Labor Standards Act (FLSA) is a federal law which requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.

However, Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. Section 13(a)(1) and Section 13(a)(17) also exempt certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status. In order for an exemption to apply, an employee's specific job duties and salary must meet all the requirements of the United States Department of Labor's regulations.

II. Salary basis requirement

To qualify for an exemption under the FLSA, employees generally must be paid at not less than $455 per week on a salary basis. These salary requirements do not apply to outside sales employees, teachers and employees practicing law or medicine. Exempt computer employees may be paid at least $455 on a salary basis or on an hourly basis at a rate not less than $27.63 an hour.

Under the FLSA, being paid on a "salary basis" means an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee's work. Also, an exempt employee generally must receive the full salary for any workweek in which the employee performs any work, regardless of the number of days or hours worked. Exempt employees do not need to be paid for any workweek in which they perform no work. If the employer makes deductions from an employee's predetermined salary, i.e., because of the operating requirements of the business, that employee is not paid on a "salary basis." If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.

III. BP policy

BP intends to pay its exempt employees on a salary basis and does not intend to make deductions from salary that are prohibited under the FLSA. The FLSA does provide for partial week unpaid disciplinary suspensions for violations of workplace conduct rules and this provision may be implemented by BP in appropriate situations.

If you are an exempt employee and you believe an improper deduction has been made from your salary, please immediately contact Human Resources. Human Resources will investigate the matter and rectify any error. BP will not tolerate and prohibits any form of retaliation against a person because he or she has reported what he or she believes to be an improper salary deduction.

Please be aware that many states, including California and Illinois, have overtime laws that differ from and in some cases are more favorable than the FLSA.


The company reserves the right to unilaterally amend, change, modify, delete, replace or add to the statements in this policy, at any time, with or without prior notice. The company also reserves the right to interpret the provisions of this policy, and such interpretations will be final and binding. In addition, not every situation can require discretionary judgments by appropriate levels of management.

This policy is not intended to create, nor does it create, any express or implied contractual rights in any person. Unless he/she has entered into an express written agreement signed by an authorized company representative, each employee of the company is an "at-will" employee. Just as any at-will employee may terminate his/her employment at any time and for any reason, the company may terminate any at-will employee at any time, with or without cause, and with or without prior notice. This policy does not represent a contract, or an offer to form a contract, and does not create any binding contractual commitments between an employee and the company regarding any subject, and does not alter or limit the at-will employment status of company employees.

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