If an exempt employee damages or loses company-issued equipment, and you decide to dock the person’s salary to pay for the loss, you risk the employee’s exempt status. That’s the conclusion of a new opinion letter from the U.S. Department of Labor (DOL).
The opinion was requested by an employer that issues cell phones and laptops to its exempt employees. The employer asked whether it could impose a fine on exempt employees who damage such equipment used in performing their jobs. In particular, the employer wanted to know whether the fine could be imposed as a salary deduction for the replacement or repair cost, or whether the employee could be required to pay for the damage out of his or her own pocket.
The DOL responded that employees who qualify for the white-collar overtime exemption must earn a predetermined salary, and must receive the full salary for each week in which the employee performs any work. The salary can’t be reduced because of variations in the quality or quantity of work. According to the DOL, imposing a fine for lost or damaged equipment would violate this “salary basis” rule.
We’ll have more on this development, including practical advice to help you avoid problems, in an upcoming issue of the California Employer Advisor.
Additional Resources:
Who’s Entitled to Overtime: How to Avoid Mistakes When Classifying California Employees, an Exclusive Employer Guide from the California Employer Advisor
Exempt Employees: Feds Revise White-Collar Overtime Rules; What the New Standards Mean for California Employers, in the June 2004 issue of the California Employer Advisor