Even if you’ve correctly classified an employee as exempt from overtime, you can jeopardize the person’s status by improperly docking their pay or otherwise treating the worker as an hourly employee. And mistakes can be costly, requiring you to pay past and future overtime. But there is a little-known special provision in federal law that allows you to fix errors without wreaking havoc on your payroll.
The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.
Police Officers Challenge Pay Docking
A new ruling from the federal Ninth Circuit Court of Appeal illustrates how this so-called “window of correction” works. More than 40 Portland, Ore., police officers classified as exempt from overtime sued the city for violating the federal Fair Labor Standards Act. The officers claimed they should no longer be considered exempt because the city had a policy of imposing disciplinary suspensions without pay for periods of less than one week. Exempt employees are entitled to the same pay regardless of how much work they actually do in a week, so long as some work is performed. This means that docking their pay for less than a week because of disciplinary infractions is usually not permissible. But the city argued that, even though its docking policy was illegal, it had corrected all the improper deductions and reimbursed the affected employees after their lawsuit was filed.
How To Remedy Disciplinary Docking Mistakes
The Ninth Circuit sided with the city and threw out the officers’ case.The court ruled that under federal law, if you inadvertently make an illegal deduction from someone’s pay for disciplinary reasons, you can remedy the situation without putting the employee’s exempt status at risk by reimbursing the worker and agreeing to comply in the future. This special “amnesty” is not available if you improperly reduce an exempt worker’s weekly pay because of lack of work.