Some businesses use pay docking and unpaid suspensions as methods of employee discipline when their employees violate their workplace rules. These forms of discipline are problematic when they are used to discipline employees who are statutorily exempt from overtime rules. If your pay has been docked or you have been placed on an unpaid suspension from your job, you might want to talk to the employment lawyers at Swartz Swidler.
How pay docking can be problematic
Exempt employees must be paid a set salary amount every pay period. The salary amount cannot have any reductions based on the quality or quantity of the work that they perform. If an employer docks the pay of an exempt employee, the employee is being treated as if he or she is a nonexempt employee. When this occurs, the law might view the employee as nonexempt and find that he or she is entitled to receive overtime pay.
Who is an exempt employee?
Exempt employees are not entitled to receive overtime pay. They must be paid a minimum of $455 per week and receive a salary. The salary is a fixed amount that does not depend on the number of hours that the employee has worked or the quality of the work that is performed. Exempt employees must also be administrative, professional, executive, or outside sales workers with the ability to make independent decisions and to supervise people who report to them.
What types of salary deductions are permitted?
Employers are allowed to make deductions from the salaries of exempt employees when an employee takes time off from work for the following reasons:
- To take care of personal matters
- To take FMLA leave when the employer has a plan that compensates the employee for the time taken off
- To perform jury duty or to take temporary military leave but only to the extent the employee has received jury fees or military pay for the time
- During the first or last week of work if the worker doesn’t work a full week
- As a good-faith penalty for violating important safety rules
- Unpaid disciplinary suspensions for violations of rules of workplace conduct when the employer has a written policy that applies to all of the employees
Employers who make deductions improperly from the salaries of exempt workers can get into trouble. However, the law does contain a safe harbor provision when mistakes are made.
Actual practice of making improper deductions
If an employer has an actual practice of improperly deducting money from the salaries of exempt workers, the court will find that the employer did not intend to pay its employees a salary. To make this determination, the court will consider the following factors:
- How many improper deductions were made
- The period of time when the employer improperly deducted money from the employees’ salaries
- The number of employees who had improper deductions and where they worked
- The number of managers who took improper deductions and where they worked
- Whether the employer had a written policy that prohibited or permitted improper deductions
Employers that are found to have an actual practice of improper deductions lose the overtime exemptions for the employees who are employed in the job classifications that were impacted by the improper deductions. This means that the employer will be forced to pay everyone who works in the same type of job overtime pay.
Safe harbor provision
Employers will not have to pay any penalties if the improper deductions were inadvertent or isolated and the employee was reimbursed for the money that was withheld. They also will not be subject to the penalties if they have a policy that prohibits improper deductions, and they reimburse their employees for the money that was improperly deducted.
Contact the employment law attorneys at Swartz Swidler
If you are an exempt employee who has had improper deductions taken from your paycheck by your employer, you may be entitled to recover the amounts that were deducted and be eligible for overtime pay. Contact the employment law attorneys at Swartz Swidler to learn about your rights by filling out our online contact form.