The US Department of Labor (DOL) provides employers the Model Salary Basis Policy for Exempt White-Collar Workers as an example of a salary basis policy that will meet the requirements of the "safe harbor" provision of the Fair Labor Standards Act (FLSA). Under the "safe harbor" provision, employers that inadvertently make improper deductions from the pay of exempt employees can shield themselves from overtime liability if they adopt a salary basis policy and take other steps.
This letter may be used to inform a once-exempt employee that he or she has been classified as nonexempt from the overtime requirements of the Fair Labor Standards Act (FLSA). The employer's legal department should carefully review any changes in exemption status before the employee is informed.