Docking pay for exempt employees: What’s allowed?
August 11, 2009 by Bill MeltzerPosted in: FLSA, Latest News & Views, Pay and benefits, policies
Don’t feel bad if you have trouble understanding the pay-docking rules laid out by the Fair Labor Standards Act (FLSA). The regs are pretty murky.
As a rule of thumb, FLSA doesn’t permit deductions from exempt employees. The regs state that the amount of money a salaried employee earns can’t be dependent on the number of days or hours he or she works. You also can’t deduct money based on the quantity or quality of work the employee produces.
But – no surprise here – there are several exceptions. What happens if your company accidentally makes an improper deduction? Nothing, so long as it’s an isolated incident and the company corrects it. But if there are repeat violations, entire departments of exempt workers can suddenly transform into OT-eligible ones by the magical powers of FLSA.
Permitted and prohibited deductions
Courts have said it’s legal to deduct pay from a salaried employee for any of the following reasons:
- Disciplinary suspensions. Unpaid disciplinary suspensions of one or more days may be imposed for salaried employees who violate workplace rules. The catch: Your company must have a written disciplinary policy that’s applied to all employees (e.g., sexual harassment) in order to legally dock someone’s pay.
- Offset jury fees or military pay. While an employer can’t dock pay for jury duty or temporary military leave, it’s OK to deduct the amount the employee receives as jury duty or military pay (although you’ll likely end up with a ticked-off employee and it’s rarely worthwhile financially to make the deduction), and
- Partial first or last week pay. You’re not required to pay an exempt staffers’ full-week salary in the first or last week of employment, unless the staffer worked the entire week.
Red flags
On the flip side, the following deductions are FLSA red flags These deductions can make a formerly exempt employee eligible to collect overtime:
- Business trips. You can’t deduct salary (or run the clock on paid time off benefits) for absences related to business trips, and
- Lack of work. If an exempt employee is ready, willing and able to work, you can’t deduct money for slow times when there’s little or no work assigned.
Tags: fair labor standards act, FLSA
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August 12th, 2009 at 9:29 am
You also forgot FMLA. When an exempt employee is on FMLA or intermittent FMLA their pay can be docked for hours not worked.
August 12th, 2009 at 9:43 am
I understand or thought I understood that exempt employee’s can be docked pay if they overused their Vacation or Sick time. Can anybody verify this? Thank you.
August 12th, 2009 at 9:44 am
I thought there was a difference between salaried and exempt employees?
August 12th, 2009 at 10:25 am
From what I understand, there is a distinct difference between EXCEMPT or NON EXEMPT salaried.
My situation is this: I was hired and classified as EXEMPT Salaried. Now almost 2 years later, Salaried employees were changed to hourly. The employer states that it is to save money and to avoid work furloughs. They have cut benefits such as paid sick time & cashed out all employees vacation time.
The only memo that came out was addressing the fact that sick time was not going to be available as of June 1, 2009 and that Vacation time was being paid out. There was NO mention of changing the employees from Salaried to hourly. When asked, my boss assumed that everyone would know what she meant.
After contacting the DOL, I am told that I never met the EXEMPT salaried rules….therefore overtime applies and that I need to file a wage claim. I have 2 concerns with this. First, if I file a wage claim they will fire me. Second, they instructed ALL employees that they were not allowed to show any overtime on any timesheet, we were only allowed to show 8 hours per day. How do I prove that I actually did work the overtime that would be on the wage claim?
Also, there is at least one employee that has been docked for NOT working due to lack of work. I know that is against FLSA rules. What am I to do with that? My title is office manager and my responsibilities include the books, ie: payroll. I have fought with my employers about the rule, however they told me that I had to follow through with what they told me to do. Am I at fault for doing as I was told?
August 13th, 2009 at 9:15 am
Also, you can deduct for personal days, since the employee is not able and willing to work.
Unfortunately many companies like to flip flop on exempt/ non exempt status as a way of avoiding OT. And in tis economy, many employees will not complain in fear of losing their jobs
August 13th, 2009 at 10:57 am
LA-
Don’t let them push you around like this. If they’ve done something like this to you, how many other employees have been affected by these kinds of decisions. I realize that it would be a truly hard decision, but it needs to be done. Employers should not get away with this kind of behavior. This is a serious issue.
August 13th, 2009 at 11:23 am
To LA: Contact the EEOC.
August 13th, 2009 at 11:36 am
Who is the EEOC? I have contacted the department of labor….I was told that I did not qualify as an exempt salaried employee and that I need to file a wage claim. Still, I will lose my job and have no accounting of how much overtime is actually owed! I can only demand 2 hours overtime for the first 7 months of my employment because I know for sure that I worked from 8AM to 7PM for those first 7 months. My bosses have instructed ALL salaried employees NOT to record anything but 8 hours a day on their timesheets. Also, another issue that just came to my attention….for hourly employees here, they were told not to record OT on their timesheets. That the company would compensate with a paid day off here or there or find another means of compensating rather than paying the OT.
I need someone that knows this stuff inside & out that can advise before I do something that will cost me my job. Keep in mind, I am office manager, bookkeeper, receptionist, payroll, HR and much more. I am affraid that by following their commands, that I will still end up in trouble for not refusing to do so!
HELP!?
August 13th, 2009 at 11:48 am
And don’t forget that the rules do vary for Public Sector Exempt employees where the employer has the fudiciary responsibility to the taxpayer to account for the time worked by both Exempt and Non-Exempt employees.
August 13th, 2009 at 11:57 am
EEOC is the Equal Employment Opportunity Commission.
Go back to your Dept of Labor. Explain the issue of being required to falsify time sheets. Ask them how you can be protected as a whistle blower. Start keeping your own time records immediately.
Your employer cannot legally fire you for requiring that they follow the law, but you may very well need an attorney to help you. Making a complaint both for yourself and the hourly employees should bring the Dept of Labor attorneys in on your side.
Good Luck.
August 13th, 2009 at 11:58 am
LA,
EEOC: Equal Employment Opportunity Commission.
Your situation falls under the “Fair Labor Standards Act.” It requires employers to pay time and a half for any hours worked over 40 in a week. Since you were incorrectly catorized as an exempt employee you, and any other employees, are entitled to any and all back pay that was over 40 hours. Contact the Department of Labor and insist they conduct an investigation. The DOL will contact your employer and request access to all payroll records and timesheets. Just because you don’t have proof of the time worked won’t mean they don’t have to pay you. Also, your name will not be given to the employer as the one who placed the initial call to investigate. Since there are many employees that fall under this category, they’ll never know who blew the whistle. You are due the money they owe you and you shouldn’t feel quilty or affraid about it. Do you think they felt bad denying you what you’re due?
August 13th, 2009 at 12:10 pm
I agree with Jeannette Zimmerman. They can’t fire you. If they do it’s called Retaliation and that’s where the big bucks come into play. You may want to take some HR classes or work on your PHR Certification. The liability is just to high for HR Managers these days. And you also would have known that you were misclassified and that most of your employees are probably misclassied if your employers are classifying employees without knowing the peramiters of Exempt vs. Non-Exempt just to avoid paying OT. Get a labor law attorney. You’re going to need one.
August 13th, 2009 at 1:14 pm
My husband works as a in-store sales rep for a flooring/carpet facility for the past 2 years. He is classified as an exempt salaried employee and paid twice a month (1st and 15th). He is paid a base + commission wage. In these last 2 years, there has been on occasion, a dock in his salary.
Question: If an exempt employee has no leave available and requests a day off during a week he works all other days, can the employer dock his pay?
August 13th, 2009 at 1:30 pm
I am an exempt Exec whose hours were changed from 40 to 20 because of a lack of work but still am expected to answer my BB when I am not working. Is that Legal?
August 13th, 2009 at 1:59 pm
LH – Probably not. However, if they do, then your exempt status can come into question. By no leave available do you mean that leave is exhausted or that there is none for the position?
Donna – If you are required to be on call you are working. See Red Flags above, your pay cannot be docked for lack of work if you are exempt. Did they renegotiate your contract?
August 13th, 2009 at 2:07 pm
tHEY RENEGOTIATED MY CONTRACT WITH ONE DAY OFF DURING THE WEEK AND 20 HOURS WORING THE OTHER FOUR. hOWEVER, i AM STILL WORKING THAT ONE DAY AND WHEN i LEAVE WORK EARLY THE OTHER FOUR.
August 13th, 2009 at 2:28 pm
LA, don’t know what state you are in but in the state I am in, public business cannot offer comp time (extra days off) instead of paying ot to hourly employees. I believe that only goverment agencies can offer this.
August 13th, 2009 at 2:28 pm
Jeanette – Leave has been exhausted. The manager approves the leave but with the notice employees will be docked against their base pay for each hour missed worked. They take their base pay divide it out into an hourly wage and then dock the wages. However, if asked to come in a hour or so early to work, they are not paid for that time thus playing into the exempt salaried status.
I myself, am an entry level HR assistant. This seems off to me.
Please advise.
August 13th, 2009 at 3:06 pm
Tam-
I am in California.
August 13th, 2009 at 3:18 pm
LH- They can dock him if he misses an entire day for personal reasons or has exhausted all of his sick time and is out sick. On the flip side…if he comes in and works one minute and then leaves, they have to pay him for the entire day.
August 13th, 2009 at 3:36 pm
I agree with AH. I have done research on this due to a past situation. I am in AR and docking was allowable under the circumstances described by AH.
August 13th, 2009 at 4:28 pm
LA–A former employer of mine did something similar. They called us exempt employees, but we had to clock in and out. Our positions did not qualify as exempt. Shortly after I left I was called by an EEOC investigator. Another ex-employee (not me) had filed a complaint. I believe the company had to pay a large fine. It didn’t benefit me personally, but they should now be paying their employees correctly. I believe you need to file a charge for the benefit of others who might not have the courage of knowledge to speak up.
August 13th, 2009 at 4:58 pm
LA, you can call the DOL in your state and they can tell you if a private company can offer comp time instead of ot.
August 13th, 2009 at 5:22 pm
I keep getting timed out….so to keep it short the DOL Wage and Hour Division enforces this not the EEOC. The EEOC investigates Title 7 complaints and other discrimantory issues. Call them with questions either if you have a personal issue or if you are a business person. They will perform an audit to assist you without any penalties as long as you correct any problems found and you call them first.
The exempt status requires you be paid by salary at a min of $466 per week. This can not be reduced below this level. However some states may have a higher limit.
Inside sales are not exempt positions. Outside Sales however can be and must require the employee to work independantly of the office in making sales orders and the like.
Docking of wages are in full day increments unless an employees leaves their employ in the midst of a day.
Hope some of this helps.
August 13th, 2009 at 5:24 pm
Correction my typing got the best of me the min salary is $455 not $466
August 13th, 2009 at 6:23 pm
LH – AH is right. The employer can not pick and choose remedies. If your husband shows up for any part of the day, they cannot dock him without calling into question his exempt status.
Donna – If your contract specifies hourly pay, they need to pay you for your blackberry time. That being said, I doubt that a contract that specifies specific hours will pass the smell test for an exempt employee.
August 14th, 2009 at 8:36 am
Bill – What do you mean by “employee to work independently of the office in making sales orders and the like’ ?
August 14th, 2009 at 8:42 am
Are there any exceptions to the exempt min. salary of $455 p/wk?
August 14th, 2009 at 8:43 am
LH Out side sales employees, those employees who perform their duties outside of the office or in a store front. Independent means they are do not have to check in with the office each time they make a sale or get approval from a supervisor. They have guidelines but they also have room to make deals without having to verify everything first.
August 14th, 2009 at 8:46 am
LH In my posting answer to you, when I mentioned store fron I meant outside of that as well. Employee who work in call centers and the like are not considered out side sales as well. A friend of mine is HR for a call center style company and they recently had to reclassify a whole group of sales people in a call center environment.
August 14th, 2009 at 8:51 am
LH, the $455 min salary is the rock bottom to be classified as exempt…now of course as you know there could be a clause somewhere that may address a very specific case. Do you have an example?
One case in point as an exception to the manual labor clause of the FLSA is, if you have a person on commission such as a mechanic who regularly earns in commission double what his annual salary is then then that person can be held excempt from OT. That is an example of how things can get very difficutl to cypher through.
August 14th, 2009 at 12:42 pm
Everyone should be careful when classifying exempt or non-exempt (and hourly vs. salary does not make any difference). Too many companies want everyone to be exempt so they don’t have to pay overtime. If in doubt, there are clear guidelines — check into it to be sure you are not mis-classifyling your employees. And if you are instructed to ‘bend’ the rules — contact your DOL. There’s not much defense for not following the law. And retaliation leads to huge judgements against companies. If we don’t stick up for our employees’ rights, no one will.
August 19th, 2009 at 6:45 am
Scott A: You are allowed to deduct if an exempt employee takes off for personal reasons and has no vacation balance left. The problem with this is that you need to be consistent and keep in mind the morale of your employees. If you accrue time and the person goes “in the hole” slightly is it worth deducting the pay only for them to accrue additional time off? On another point, some employees do not care if they receive less pay and then they look at it as if they get additional vacation time. Employers plan their workforce with vacation time in mind, so if you allow employees to take time without pay(barring any extraordinary circumstances) then essentially they could take another week to two weeks off which hinders the work being done. Therefore you are left with a tough decision. I generally allow my staff to go up to 40 hours negative and then deny any time off until they get back up in their accruals.Good luck!
August 20th, 2009 at 2:21 pm
I am part of the HR department in my office. There are basic provisions for determining the exemption status of an employee. Go to google, type in FLSA Status Test and the two letter abbreviation for your state. Most states have a test on their state government website with the specific instructions and requirements to make exemption status determinations.
August 20th, 2009 at 2:51 pm
To the author – I just read the article today, and there’s an error — you say “entire departments of non-exempt workers can suddenly transform into OT-eligible ones.” Non-exempt employees ARE OT-eligible. I think you meant to say “exempt can transform.” Might you be able to change this in the article?
August 20th, 2009 at 3:06 pm
To the author: thankyou!
August 20th, 2009 at 3:16 pm
My understanding (recently verified by a legal expert) is that if an exempt employee is taking less than a full day off, and your PTO policy allows time off to be taken in less than full-day increments, then you can require an exempt employee to use their PTO for the time they take off. If your PTO policy allows employees to carry a negative balance, then even if they have exhausted their PTO, you can still require them to use PTO and go negative. However, if your PTO policy does not allow a negative balance (or you don’t have a PTO policy), then an exempt employee’s pay cannot be docked for time taken off if it’s less than a full day.
August 20th, 2009 at 3:54 pm
To Bill, SPHR
What State are you in? I understood the minimum salary for an Exempt employee is no less than double the hourly minimum wage . That would be $640 per week in CA. Or am I misinformed? This info is from Calbiz.com or the Calif. Chamber of Commerce. Please advise…
August 20th, 2009 at 5:03 pm
Norma Jean SPHR
I am in Virginia but have operations in Maryland, Georgia and South Carolina also. The minimum I stated is the Federal Minimum for which all the states I operate in comform to the Federal Standard for Exempt Salary. I am not familar with that standard in Calif. laws. I do know that they do have higher minimum wage laws there so it doesn’t suprise me that they would have a higher minium for exempt as well. If my memory serves me correctly Calif. does have a minimum wage of $8.00 so your calculation would be correct if they use that formula. If you go into the DOL web page and click on FLSA they have links to the individual states and their standards.
August 20th, 2009 at 6:32 pm
To Bill SPHR,
Yes, everything is higher in California, including the minimum wage. We also lead the nation in Employee rights. If you’re in Virginia go home.
August 20th, 2009 at 6:51 pm
Bill SPHR……that was mean.
August 20th, 2009 at 6:52 pm
Norma Jean……that was mean.
August 20th, 2009 at 6:53 pm
BILL please strike that….made the comment to the wrong name.
I don’t understand why Norma Jean would have said…if you’re in Virginia go home. I don’t think what you said necessitated that kind of talk.
August 20th, 2009 at 6:58 pm
LA and Bill, SPHR
LA: I sent my blog at 4:45 PST which means Bill is working late and I told him to go home. That was all. My concern was for Bill. Get a grip LA
August 21st, 2009 at 3:11 am
Norma Jean
My apologies, but if you read it, it is easily misunderstood.
Have a great day.
August 21st, 2009 at 7:59 am
Certianly, LA and Norma Jean SPHR no offense taken, believe me it was a long day and I was ready to head home.
August 21st, 2009 at 10:34 am
I have a question that I hope you can answer. I am a salary employee, a manager in title but have no one that I directly supervise. Am I an exempt employee?
I have run into this before at another company when I was a salaried sales manager for a newspaper. I oversaw 40 carriers and worked about 80 hours plus a week. If I ever needed some time to go to the doctors my pay was always docked for that time. When I asked the DOL about this at that time they stated there were different levels of exempt and since the carriers were private contractors they did not count as far as me being a supervisor so my company could work me 80 hours and still doc my pay for absenses.
This was a while ago so I may very well be mistaken in what I was told. Not to mention I was completely wore out and couldn’t think straight.
Thanks for your help.
August 21st, 2009 at 1:27 pm
GTS, what kind of position do you have? There are some positions that you do not have to have the two FTEs. Such as an administrative type manager of which Human Resource Managers fall under. The key is that your position is one that works with little or no direct oversight and you have the ability to make decisions that are of a high impact for the company and no manual labor is involved. The DOL was correct in saying there were different exempt classifications but this deals with the criteria to be exempt not varying levels of how the company can deal with you. You are either exempt or you are not and the rule covers you, so in your previous employer’s case if they were docking you for heading to the doctor and you worked part of that day they had to pay you, now they could have used vacation, sick time or if your company uses PTO they could use that but you still recieved a full day’s pay. If your previous employer docked your pay then you were not exempt and you needed to be paid OT for anything over 40 hours a week. That is the federal standard and state law can not fall below the federal requirements but can exceed it.
August 21st, 2009 at 1:39 pm
Bill…thank you for expanding on the comment to GTS. I am in a similar situation. I do meet a couple of the Exempt test rules, however not all of them. DOL told me to file a wage claim for the time deducted & for any overtime that is due to me. Although, my question is still this…..my employer instructs ALL employees to only record 8 hours of working time on timecards. Therefore, how would the overtime be proven? I do not want to go through all of this and most definately get fired (which I know is retaliation) and not get anything out of it.
Previous to being switched to hourly, whenever I took anytime off…I had to use sick or vacation time in order to get my full 40 hours per week. When they did away with the sick, vacation & paid holidays…they claim that we were switched from salaried to hourly at the same time. There is nothing in that memo stating that fact.
Your thoughts? Anyone?
August 21st, 2009 at 2:08 pm
LA unfortunately a lot of companies either through ignorance or in a lot of cases on purpose use this rule to their advantage which it sounds like yours did. When making a claim to the DOL state to the best of your knowledge the OT that is due you and the more specific you can be makes it better for you. In turn your company has to prove that you didn’t work OT, the DOL leans toward the employee’s side rather than the company’s. If your company is directing the employees to record 8 hours even if they work more then the company is in big trouble. The key find and get your hands on any written notice to this or get 2 or more employees to give you a written statement that they were directed to do this. If you have this then the DOL will look upon your company as being deliberate in their actions and a willful charge can be placed with would involve a fine and possible a large one if it is flagrent.
August 21st, 2009 at 4:10 pm
Under the 2004 changes to the FLSA, employers who take improper deductions have a “safe harbor” whereby exempt status is not lost if the employer has a clearly communicated policy prohibiting improper deductions, which includes a complaint procedure; reimburses employees for any improper deductions; and makes a good faith commitment to comply in the future — UNLESS the employer willfully violates the policy by continuing to make improper deductions after receiving employee complaints.
We hand out our policy statement at new hire orientation for exempt employees.
If you complained, and they kept making improper deductions, you have a valid claim for any OT worked, even if you really are in a legitimately exempt job.
What I typed about the “safe harbor” is from the power point of a law firm-conducted seminar.
September 11th, 2009 at 8:02 am
Can an employer require an exempt employee to work more than the standard hours week after week. The minimum exempt salary in NY is 536.10 a week. Is comp. time permissable for exempt employees?
September 11th, 2009 at 10:46 am
I work for a public sector. I am a salaried exempt employee. I realize that private sectors and public sectors are different. In detail please tell me how a public sector employee is handled as far as time out of the office. What is recorded? If I come in and work 6 hours for the day, I post 2 hours to my vacation or sick. I was told that for private sector, an exempt employee can just walk in the office and walk back out and be considered working and not be docked. Is this correct and how is it, as I asked earlier, for the government employees?
September 22nd, 2009 at 10:47 am
What if exempt employees request time off w/o pay and they complete a time-off form statiung not to use accrued time because they want a personal day?
September 30th, 2009 at 9:26 pm
I am given 5 sick/personal days per year. Once they are exhausted. My employer says that if I miss 2 hours from work he will dock 1/2 day pay, if I miss 4 hours from work he will dock a whole days pay. I am a salaried employee who works a minimum of a 45 hour work week without overtime pay. I don’t understand exempt vs non-exempt. Is this legal?
October 5th, 2009 at 1:16 pm
Wow…lots of questions..so I will see if I can answer them all.
Pauline- the definition of exempt is that the employee is paid the same rate of pay regardless of the number of hours worked. So in your situation, yes, your company can require an employee to work more than 40 hours a week (unless they are underage). The is usually a requirement in most industries that an employee be given at least 8 hours off between shifts.
Lisa- The person who told you that if an exempt employee walks in and walks out would have to be paid for the entire day is correct. Your company can require you to use vacation time in partial day increments as long as you have a bona fide plan in place. However, if you were to run out of time off, and come in and work for a short while, they would have to pay you for the entire day.
Mary- you should not allow an exempt employee to take a day off w/o pay as long as they have PTO available. However, once they have exhausted all PTO, if they are willing to take an entire day off w/o pay, this can be allowed.
spb- if you are an exempt employee, this is not legal as you must be paid regardless of the number of hours that you work.
October 8th, 2009 at 11:22 am
AH
I 100% agree with your reply to Mary. My problem is that I cannot find in the DOL language where it states that if an employer has a PTO policy, the employee must use their PTO days before requesitng a full day as unpaid time. We have exempt employees with PTO available and will request unpaid full day. I have always denied their request, unless of cours they have exhasted all PTO. However, mgmt is now questioning this and wants proof that it is not allowed.
October 13th, 2009 at 2:31 pm
I am a salaried HR Generalist for a well known organization. My concern is as follows I was hired to do a specific job and infact I handle other duties as well. As a salaried EE i know that I am not to be docked if I leave the office two hours early if I have no more personal or sick time left I am requiredto document on a timesheet when I am away. Thats fine but I was docked 2 hours pay from my paycheck. also I had an issue that needed my personal attenmtion at home and I called out. I was informed that I needed to put in for unpaid absence or personal time. Well noted that the manager realizes that I have only sick time left and we only get 2 personal days a year, I was told that I needed to record the day as unpaid (EXEMPT) We are and were forced to use all of our vacation time and those of us like myself who used all the vacation time will have to take a week with no pay in November and december. UGHHHHHHHHHHHHHHHHHHHHHHHHHHHHh, this copmany seems to me like they are making HUGE BOOO BOOOOS
October 13th, 2009 at 2:56 pm
SSJ, just because you’re salaried does not mean you’re exempt. It’s a very common misconception. There are specific ‘tests’ to determine exempt or non-exempt, and being paid hourly or salary is not one of them. Look up the differences and determine if you’re exempt or non-exempt. If you’re truly exempt, they are not allowed to dock your pay for any day in which you work. If you are non-exempt, the rules are different.
October 13th, 2009 at 3:45 pm
RandiG, thansk for the posting. I am a saleried EXEMPT employee. I know the rules and I have metioned it in a meeting in front of my manager and she totally ignored it. I am just going to do what I need to do and get out. But not without a wage claim. Thanks
October 13th, 2009 at 3:51 pm
How do you know that you are exempt employee? It certainly does not sound like you are being treated as one. They can (and rightfully did) dock you for the entire day that you missed when you had no personal.vacation time left. But if they docked you for a partial day missed, and you truley are exempt, that was a violation under FLSA. If you really are a salaried employee, then why are you being required to keep a timesheet?
October 13th, 2009 at 3:57 pm
Reply to AH: This obviously doesn’t apply to a lot of companies, but I work for CPA firm and we require everyone to keep track of their time, otherwise we wouldn’t be able to bill our clients. They are required to also keep track of non-chargeable time so that we have metrics for understanding what’s happening in our practice. But we don’t dock pay on exempt employees if they report less than 8 hours.
October 13th, 2009 at 4:27 pm
SSJ, your employer needs a wake-up call. What they are doing to you is most definitely a violation of FLSA and they should not be allowed to continue with this illegal policy. I can understand you not wanting to rock the boat while still employed, but you should certainly file a claim once you have an alternative to working there.
October 14th, 2009 at 8:36 am
SSJ – it is always a tough decision when you bring this up to your manager and they ignore you. If this is happening to you and you are the HR person, I can only imagine that it is happening to other exempt staff unfairly. If I were you, I would make an appointment with the legal counsel or the CFO and explain that you are concerned about the risk the organization is taking with improper salary deductions. If an employee complains to the DOL, the company is risking an audit. I would make a very strong case that the process needs to be reviewed and corrected immediately to avoid any actions that can be taken. I would at least give a good faith effort of allowing the company to make the change before I reported them to the DOL.
For help the DOL says as follows:
1. Deductions from salary may be made for absences of a day or more (i.e. for one or more full days ) on account of:
a. Personal reasons
b. For sickness or disability, provided the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for illness. Such deductions may be made before the employee has qualified under the plan or policy, and after the employee has exhausted their time under such a plan.
Deductions may not be made for absences of less than a full day for personal reasons or disability except where the absence is due to a leave of absence taken pursuant to the federal Family and Medical Leave Act.
Deductions from salary may not be made for absences occasioned by the employer or by the operating requirements of the business.
2. If an employee loses time from work during part of the week because of jury duty, attendance as a witness, or temporary military leave, the employer may offset any amount received by the employee as fees or military pay against the salary due for that week. If the employee receives no jury or witness fees or no military pay, no deduction from salary can be made.
3. Deductions may be made as a result of disciplinary suspensions for infractions of safety rules “of major significance” – i.e. only those relating to the prevention of serious danger to the plant or other employees.
Deductions may also be made for disciplinary suspension of one or more full days for infractions of workplace conduct rules pursuant to a written policy applicable to all employees.
4. Full salary need not be paid for the initial or terminal week of an individual’s employment if, as a result of his employment commencing or terminating after the start of the week, he does not work the entire week; pro rata payment will suffice.
Good luck and keep us all posted!
October 15th, 2009 at 11:26 am
I am a current salaried exempt empolyee (just started in June 2009) currently the company is having money issue’s due to the economy so they requested for me to take off every other Thrusday to save money and not pay for that day, can they do this even though I am willing and ready to go to work???
October 15th, 2009 at 1:37 pm
They can put you on furlough for that time, but then you can’t work (phone calls or e-mails or texts) — if you are exempt and you do any work at all on those days off, you must be paid for the entire day.
October 15th, 2009 at 5:20 pm
So they can do this even though I am willing to work, my understanding was that they can’t do this??
October 15th, 2009 at 6:32 pm
My understanding is they can do this if they institute a furlough program — but I would think you could not be the only one on furlough. The rules are murky and difficult to understand — I would suggest reading up on the FLSA — it’s possible their plan would make you a non-exempt employee, subject to overtime. It’s not uncommon for employees to be misclassified as exempt in an effort to avoid overtime, so check into the rules for exempt and non-exempt as well.
October 15th, 2009 at 7:44 pm
RS:
They can put you on a Forced Work Furlough if they don’t have the money to pay you. I know this for a fact because I just did this under Attorney advise…with the provision that you must hire the Furloughed EE’s back. If we laid them off we would have had to pay them all vacation time etc due them and we just didn’t have it. I had ee’s that worked over 20 years for the company that I had to Furlough. It was the worst day of my life…thank goodness we brought everyone back after a 4 month Furlough.
October 16th, 2009 at 6:21 am
Based on a DOL opinion letter provided by our attorney, you have 2 options — reduce hours with a pay reduction and the exempt employee now becomes non-exempt; OR institute a pay cut instead of an hours reduction. The pay cut can’t be intermittent just to avoid occasional OT — it must be intended to remain in effect for a period of time that doesn’t look like you’re just avoiding paying OT.
October 16th, 2009 at 6:42 pm
Here’s the situation I have worked for the same company for approx. 6 years I have worked every weekend thurs @ 3pm straight through to sun @ 3 pm and am allowed to sleep on site from 10pm to 6pm but must have to work off and on throughout the night should the need arise, this is a total of 72 hours per week, I am not allowed to take a day off durring that shift if it is in the middle sat or Sunday if I was to take one of these days off I would be required to take the entire shift off and lose the pay for that entire shift, I am supposedly salary paid, but if I have to take a day off durring my shift my pay is docked , I do not get paid overtime, nor have I ever taken time off In the six years I have worked for the company unless I have made the time up before I took it off, my pay stub says I 40 hrs of sick time but I have never been paid for them and they have never increased, should I qualify for overtime pay under fsla
October 16th, 2009 at 7:28 pm
Oops my typing got away from me I meant 10 pm to 6 am for sleep
October 23rd, 2009 at 2:07 pm
I am a controller for a publically traded company. They have docked my pay when I have worked from home. Is that legal. I have worked overtime and was told that is part of your position and part of your salary. Even when I take PTO I have to take my laptop todo work and be on call. For example, I missed work last week because of the FLU and was tolld by the doctor not to go to work until the following week and provided them with a note from the doctor. I was called at home everyday, worked from home as I have a laptop that is linked to my office computer filing withholding taxes answer questions and wire funds from institutuions and was not paid one single day. Again is that legal? Someone please help!!! I am wondering if I should file a grievance and to whom. Thanks to all that can help.
October 23rd, 2009 at 3:12 pm
Doesn’t sound legal to me — if you’re exempt, they have to pay you for any day in which you worked any time at all (even just 10 minutes). They should not be docking your pay if you’ve worked, whether it’s from home or in the office. If you’re non-exempt, then they owe you overtime for any hours more than 40 worked in any given week (or over 8 hours a day if you’re in CA).
Is there an HR department at your company where you can start? If not, call the Department of Labor and talk to them — your situation appears to be an overt violation of FSLA. Your company may not realize they are breaking the law. Keep in mind that although retaliation is illegal, it still happens so you need to be prepared for a possible battle.
Good luck.
October 23rd, 2009 at 3:16 pm
Smiller- you situation is a little different, but assuming you are an exempt employee then you should not be docked pay since you are working from home. In the case of the illness you may have protection under FMLA (if you meet the criteria) and in that instance they can dock your pay and by contacting you to work they are violating your rights under FMLA. Have you discussed this situation with anyone at work? Could it be something as simple as the timekeeper not knowing your exempt status? I always vote on giving the employer a chance to make a correction before filing complaints. You also mentioned the word grievance, which makes me wonder if you are covered under a union contract in which you would need to know the agreement of the contract.
Your best bet to contact your HR department for a resolution. If they do not assist you or explain their reasons satisfactorily, then you can always contact your local department of labor. Good luck
October 23rd, 2009 at 4:25 pm
One other note, I am allowed to ask to see my employee file and make copies before I bring up the issue of docking pay? This copany has a history of recreating what happened after the fact and I want to make sure they don’t make false notations in my employee file. I am affraid once I bring this to the forefront false records may be made in my file. Thank you to all that respond.
October 23rd, 2009 at 5:01 pm
Whether or not you’re allowed to see your file depends upon where you live. In Colorado, employers do not have to allow employees access to their personnel files.
Document everything — keep records of phone calls, keep all your e-mails showing that you worked when you were supposed to be off, keep all your check stubs to show when pay was docked. Build your own file documenting everything, with all the proof you can assemble. I would suggest an online journal, date and time-stamped, listing any work you’ve done that day outside of regular working hours or when you’re on PTO — but keep it on your personal computer.
November 16th, 2009 at 11:04 pm
Does it matter how many employees a company has to have to meet exempt vs. non-expempt? My former employer said all of us were salary and did not pay anyone overtime, but recently docked pay if we didn’t work 80 hours. We are all expecting to work at her beck and call. In the beginning of the year, my dad had brain surgery, my grandmother died, and I was going through a divorce. I missed quite a bit of time, was paid my normal pay, and made up the missed time over the next several months. About 2 months ago or so, my son had the flu and I was not allowed to come to work. I worked everyday from home, not a full 8 hours a day, and I was docked the time under 40 hrs. The three pay periods that followed, I worked at least 45 hours a week, without receiving overtime, then I got sick and missed 4 days of work, but worked from home like I did when my son was sick, I was docked time. She says I have exhausted all of my PTO, but I had to make up all of the time I was paid for the time missed earlier in the year, so that shouldn’t count against my PTO. When I brought this to our then HR person, I was reprimanded and told no one would let me off that much time and still pay me. I don’t think that is the point, she did, and I made up all of the time I was paid. No one at the office is allowed to make decisions without going through her first, so I don’t believe any of us fit exempt status. I am so confused. I don’t work there anymore, so do I lose anything if I file a complaint?
November 17th, 2009 at 1:21 pm
Exempt vs. non-exempt is still very misunderstood. I just had an HR manager tell me that the only difference is whether the pay is salary or hourly, which is patently false — but even HR professionals don’t understand it.
Your HR person seems to be skating on thin ice. Think seriously about filing a complaint, particularly if you can document your statements. Since you no longer work there, there’s nothing they can do to retaliate — but I’m not sure if a new employer can access the information about the complaint.
November 17th, 2009 at 5:49 pm
One main caution for those making these inquires of inside personnel. Though the title may say HR Manager you need to know if that really means HR Professional. Too many companies assign HR duties to clerks or staff with no or little HR background and they unfortunately are left to their own devices to learn on the job. If you ever get a response that the difference between exempt and non-exempt is that one is salaried and one is hourly then you have an issue with the level of knowledge of that individual. The DOL has a contact point anyone can call to answer these questions.
Salaried status is only one part of the distinction between exempt and non-exempt
November 17th, 2009 at 6:16 pm
Even the HR consulting firm we employ uses the terms ‘hourly’ and ’salaried’ interchangeably with ‘exempt’ and ‘non-exempt’ — and they are the professionals I go to with questions!
November 20th, 2009 at 8:53 am
I am an employer in Ga and I have several exempt employees. My problem is that my property (equipment) is continuously being damaged due to neglect. I have done some research and have found conflicting results. Is it legal for me to deduct or dock their pay for breaking my equipment? Some of my research says that I can, as long as their pay does not fall below min wage. Also, what are the laws in the same situation regarding non-exempt employees?
January 6th, 2010 at 10:34 am
[...] Docking allowed for exempt employees: What’s allowed? [...]
January 7th, 2010 at 1:16 pm
Question re pay docking:
We have a company-wide work furlough in place at the moment. (It began in Feb. 2009)
All employees, regardless of whether they are exempt or non-exempt, salaried or hourly, are required to take 8 hours unpaid every payroll period (i.e. they are paid 72 hours rather than 80).
The only exceptions are if they use 8 hours of personal or vacation time, or report 80 hours of billable time.
(Example 1: they have 72 hours of work plus 8 hours of vacation so they’ll be paid a full 80. Exmaple 2: they report 80 hours to be billed to a client so they’ll be paid 80 hours).
Recently our payroll company incorrectly paid about a third of our employees their full salary rather than the actual number of hours reported (72). As the person in charge of payroll, I have to dock the overpayments from the next paycheck.
I think we can do this since the company-wide furlough is in place and all employees are treated the same. However, I would like to make sure I’m not missing anything.
One other thing: Sometimes an employee will report even less than 72. That means we end up docking pay above and beyond what is stated in the furlough policy.
Would someone please comment on my situation. Thanks!
January 19th, 2010 at 10:45 pm
Sorry I can’t help with the last post. But I need some opinions on this situation: While working as an exempt employee I developed medical issues, causing me to request an accommodation under the ADA and an intermittent leave under the FMLA. Both were approved. The condition I have primarily affects me within 1-3 hours of the time I wake up, and caused me to frequently arrive up to ~25 minutes late. However, because of workload, I frequently worked well over 8 hours a day, sometimes as many as 12. In addition, I was required to carry a BlackBerry and respond to calls on Saturdays. Our company does have short term disability pay available, up to 320 hours a year, and requires both exempt and non-exempt employees to use it for absences. Nothing in the policy says it is to be used for tardies or partial day absences. However, in my case they required me to track any time I was late as disability pay, even if I “made up the time” by working more than 8 hours a day. I have worked as an exempt HR professional for many years and have never had to track my time in less than half day or full day increments, so I assumed they wanted to to round to the closest 5 minutes or 15 minutes. I was told that I needed to track my arrival time to the minute, even though they knew I was making up the time “on the back end” of the day. Ultimately, I was written up for my times not matching with theirs, in many cases citing 1 minute discrepancies! At the rate I was taking the time off, I would never have hit anywhere near the 320 hours of disability pay for a year, and I had medical documentation to support my need to be late. I was aghast after having worked many 55 and 60 hour weeks over the past 3 years. When I disagreed with my boss about the warning, I was terminated. There are other things that they did not handle well, and I am first pursuing an internal complaint against them before considering either regulatory or legal avenues for redress. Technically, my pay was not docked, since they used the disability pay to keep my pay whole. But under the circumstances of the overall hours I was working, it is my position that it is ureasonable for them to expect that I should have to accurately log my “arrival time” down to the minute. I would welcome any opinions or insights—-do you agree or disagree that this expectation was unreasonable?
Thank you in advance for your opinions.
January 21st, 2010 at 10:24 am
Yonnie: When you asked for a reasonable accomodation under the ADA, did you ask for an amended work schedule? And, if so, was it put in writing? Since you normally work more than an 8 hour workday, an amended work hour schedule would have solved the problem…amended to say 8:30 to 5:30 or a reasonable time to cover your later arrival. Tardiness and STD wouldn’t have been an issue because your workday would have started at 8:30 and ended at 5:30.
Of course, on the otherhand, taking the hard approach…if you knew your condition would cause you problems from 1-3 hours after your wake-up time, maybe you should have taken the responsible approach to adjust your sleep schedule where your condition would not have an affect on your work time arrival. I once had an employee who was late for work by about 5 minutes almost every day. He drove in to work from a neighboring town. When I spoke to him about his tardiness, he always gave an excuse like tied up in traffic (not a big city), had to wait for a train, etc. I told him that maybe he should leave for work 5 to 10 minutes earlier and hopefully that would solve the problem and it did.
As for your disagreement on the time that you were late, I cant’ offer any advice because I don’t know how the policies read.
If you care to share, what was the actual reason for your termination? I know you said because you disagreed with your supervisor about the discipline, but how was your termiantion written up. Your termination seems to be the real issue…is that right?
February 2nd, 2010 at 11:27 am
Ok, here’s a new wrinkle. If we apply PTO to an exempt employee who is on FMLA leave are we required to pay Holiday pay? If an employee is on FMLA and they are covered by a Short Term Disability policy, it was my understanding that we could not “FORCE” PTO. For example, when an employee goes on maternity leave, they are receiving STD but they elect to apply a limited number of PTO hours during their leave to cover their employee contributions for medical and voluntary benefits. So because they applied PTO and the PTO hours are deemed “work” hours – are we then required to pay them for any holiday that falls within that week?
August 29th, 2010 at 9:37 pm
Question. The company pays the exempt at my facility overtime for Sat and Sun. Time and one half for Sat, dbl for Sunday. The workday is 9 hours, pay bi-monthly, a 7-day a week operation. To allow supervisors more time off the company requires the supervisors to take two days off during the week. If Sunday is worked, those hours make up for the 18 hours missed during the week. If Sunday is not worked then the supervisor(exempt) is docked for the hours. Is the company allowed to dock the supervisors?
August 30th, 2010 at 6:20 pm
My understanding is that exempt pay cannot be docked unless it is in increments of a full 40-hour week. Check with the Department of Labor in your state, as this could be a significant infraction that is quite unfair to the employees.