Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It only takes a minute to sign up.
Sign up to join this community
I have been reading about various CEOs taking a $1 salary; typically they also take some from of alternate compensation, e.g. stock options.
However, very rarely one will take a $1 salary with no alternative compensation — supposedly Steve Jobs did this.
My question is how is this legal under minimum wage law? On the Department of Labor's website it appears that a salaried employee must be paid at least $455 dollars week. How does this work?
Part of your first link has this statement that I suspect you are missing:
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.
Note that executive is in that list. As for the additional note:
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.
Generally which means, "in most cases; usually." is not a universal qualifier and thus exceptions can exist. I'd imagine that restricted stock could be a way around some of the rules as there would be a monetary value there in the case of the stock for companies of a particular size.
Even under the executive exemption, see Exemption for Executive Employees Under the Fair Labor Standards Act (FLSA) Section 13(a)(1) as defined by Regulations, 29 CFR Part 541, it seems that a minimum compensation is required.
To qualify for the executive employee exemption, all of the following tests must be met: The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week... etc.
There is one other possibility under FLSA Section 13(a)(1), as a "bona fide exempt executive".
Exemption of Business Owners
Under a special rule for business owners, an employee who owns at least a bona fide 20-percent equity interest in the enterprise in which employed, regardless of the type of business organization (e.g., corporation, partnership, or other), and who is actively engaged in its management, is considered a bona fide exempt executive.
Taxable fringe benefits are included in taxable wages for the purpose of FLSA.
So when those executives get to use company cars or company jets that value is "wage" even if it isn't salary.
