Generally, if you dock the pay of exempt workers, you kill their exemption because you are treating them like nonexempts. You could easily owe a few years’ worth of overtime. But DOL does allow docking in certain circumstances. Here are those exceptions, along with a resource to make sure FLSA disasters don’t befall you.
In yesterday’s Advisor, we gave you the first 9 of what we called “FLSA disasters” –violations that could lead to a major lawsuit.
Now, here’s the 10th—exempt docking, the taking of illegal deductions from exempt employee pay. Do it, and the employee’s status can be changed to nonexempt, with the possibility of your owing highly paid workers up to 3 years of back overtime! Not something you want, we’re sure.
So here—taken from BLR’s FLSA Wage & Hour Self-Audit Guide—are the situations that do allow an employer to dock an exempt employee’s pay.
Full-day absence for personal reasons, other than sickness or disability. For example, if a person is absent for 2 full days to handle personal affairs, the employer could deduct from the salary for 2 full-day absences. However, if the exempt employee is absent for 11/2 days for personal reasons, the employer can deduct only for the 1 full-day absence.
Full day or more for sickness or disability (including work-related accidents) if the deduction is made in accordance with a bona fide plan, policy, or practice of providing compensation for loss of salary. Employers may also deduct full-day absences if salary replacement benefits are available through state disability insurance or under state workers’ compensation laws.
Jury duty or temporary military leave. While an employer cannot make deductions from pay for absence of an exempt employee caused by jury duty, attendance as a witness, or temporary military leave, the employer can offset any amounts received as jury fees, witness fees, or military pay for a particular week against the salary due for that week, without loss of the exemption.
Avoid wage and hour violations with BLR’s easy-to-use FLSA Wage & Hour Self-Audit Guide. Try it for 30 days … on us! Click here
Infractions of major safety rules. Deductions may be made for penalties imposed in good faith for infractions of safety rules of major significance (for example, smoking in an explosives plant, oil refinery, or coal mine).
Sexual harassment or violence. Deductions may be made for unpaid disciplinary suspensions of a full day or more, imposed in good faith for infractions of workplace conduct rules.
First week/last week. An employer may pay a proportionate part of an employee’s full salary for the time actually worked, in the first and last week of employment.
FMLA intermittent leave. An employer is not required to pay full salary for weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act (FMLA). Employers may pay a proportionate part of the full salary for time actually worked.
That’s it. If you are docking for other reasons, you’re probably risking the exemption.
Many Opportunities for Disaster
As we have seen in yesterday’s and today’s Advisor, there are myriad ways that wage and hour issues can trip up employers—with big-dollar consequences. But there’s also a way to catch those hassles before they get expensive—an FLSA self-audit.
All the checklists you need to avoid overtime payment errors. They’re in BLR’s award-winning FLSA Wage & Hour Self-Audit Guide. Try it for 30 days. Click here
Consider a Prepared Self-Audit Program
While you can do such an audit yourself, there are endless details. So it’s usually best to use a prepared program to walk you through. Customers tell us that BLR’s FLSA Wage & Hour Self-Audit Guide is both effective and easy to use. It even won a publishing award in that regard. Here’s what customers like about it:
–Plain English. Drawing on 30 years of experience in creating plain-English compliance guides, our editors have translated the FLSA’s endless legalese into understandable terms.
–Step-by-step checklists. The book opens with a clear narrative of what FLSA is all about. That’s followed by a series of checklists that utilize a simple question/answer pattern about employee duties to find the appropriate classification.
–Complete. Many self-audit programs focus on determining exempt/nonexempt status. Ours also adds checklists on your policies and procedures, and includes questioning such practices as whether your break time and travel time are properly accounted for. Nothing falls through the cracks because the cracks are covered.
–Convenient. Our personal favorite feature: A list of common job titles marked “E” or “NE” for exempt/nonexempt status. It’s a huge work-saver.
–Up to date. If you are using an old self-auditing program, you could be in for trouble. Substantial revisions in the FLSA went into effect in 2004. Anything written before that date is hopelessly—and expensively—obsolete. BLR’s FLSA Wage & Hour Self-Audit Guide includes all the changes.
You can examine the BLR FLSA Wage & Hour Self-Audit Guide for up to 30 days at no cost or obligation. Click here and we’ll be glad to arrange it.