united-states employment california new-york-state
How do executives pay themselves $1 per year without running afoul of minimum wage laws?
<p>Many executives, especially chief executives, receive nearly all of their compensation in stock. Both for public perception, and for tax reasons, Elon Musk, Eric Schmidt, Jack Dorsey, Larry Page, Mark Pincus, Mark Zuckerberg, <a href="https://en.wikipedia.org/wiki/One-dollar_salary#Notable_one-dollar_salary_earners" rel="nofollow noreferrer">and many others</a> pay themselves only $1 per year.</p>
<p>Assuming these men and women are legally &quot;employed&quot; by their respective companies, and given that I don't believe compensation in stock is legally pay under the federal Fair Labor Standards Act, how do they manage to avoid receiving at least minimum wage in cash?</p>
<p>Where jurisdiction is concerned, I'd like to consider federal law in the United States, as well as state law in New York and California, though I am curious to hear about any other relevant state law as well (maybe Delaware Corporations follow only Delaware minimum wage laws?). Thanks in advance!</p>

<p>Under the <a href="https://www.law.cornell.edu/uscode/text/29/206" rel="noreferrer">Fair Labor Standards Act</a>, employers are generally required to pay a minimum wage of $7.25 an hour.</p>
<p>But under <a href="https://www.law.cornell.edu/uscode/text/29/213" rel="noreferrer">29 U.S. Code § 213</a>, many employees are exempted from this requirement. For Elon Musk and similarly situated individuals, the relevant exemption is found at section 213(a)(1):</p>
<blockquote>
<p>any employee employed in a bona fide executive, administrative, or professional capacity</p>
</blockquote>
<p>Although FLSA's definition of &quot;<em>bona fide</em> executive&quot; typically still requires at least a salary $684/week, <a href="https://www.law.cornell.edu/cfr/text/29/541.101" rel="noreferrer">29 CFR § 541.101</a> expands that term to also include any employee who (a) has at least a 20 percent ownership interest in the employing business; and (b) is actively involved in the business's management.</p>
<p>By my understanding, this would include all the executives you've mentioned above.</p>
<p>Contrary to all the other answers so far, the fact that the employee is salaried is not sufficient to remove him from the protections of FLSA, which applies to both hourly and salaried employees. Some hourly employees are covered; some are not. Some salaried employees are covered; some are not. For more details on determining whether a salaried employee is exempt or nonexempt, you can review the Department of Labor <a href="https://www.dol.gov/agencies/whd/fact-sheets/17g-overtime-salary" rel="noreferrer">Fact Sheet #17G</a>.</p>
