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Understanding Pay-Docking Rules for Exempt Employees

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The new pay docking rules set out by the Fair Labor Standards Act (FLSA) are difficult to understand.

FLSA does not generally permit deductions from exempt employees’ salaries. State regulations specify that the amount of salaried pay an employee earns cannot be dependent or a reflection of the number of hours or days he/she works. Deductions also cannot be based on the quality or quantity of work an employee produces.

If there is a deduction in error, payroll can correct this. However, if there are many incidents and repeat violations, companies can find themselves paying entire departments of salaried employees overtime.

Pay Docking Scenarios

There are several different types of exemptions for salaried employees’ pay, which includes:

  • If they do not work for a week, you do not owe them pay.
  • Partial-day absences cannot be deducted, but if an exempt employee is gone for a day or more due to personal reasons not associated with an accident or sickness, their pay can be docked.
  • If an employee is subject to penalties associated with violating safety rules, they can receive reduced pay.
  • If an employee is gone for a day or more due to disability or sickness and the company provides compensation for loss of salary caused by these types of issues, an employee can be forced to use their “bank” of leave.
  • If an employee is subject to jury duty, military pay or witness fees and the employee receives amounts to offset these costs, their pay may be deducted just for those amounts. However, any deductions beyond this are not permitted.
  • If an employee breaks workplace conduct rules, employers can offer unpaid disciplinary suspensions.
  • If an employee quits mid-week, employers cannot only pay for the actual days worked.
  • If an employee’s absence falls under the Family and Medical Leave Act (FMLA), an employer can convert the salaried employee into an hourly employee only during the time they are on leave without eliminating the employee’s exempt status. This is an acceptable pay docking exemption. This is only possible under certain circumstances, so it is best to contact your local Labor board.

Ninja Gig does not give legal advice; so if you have any questions, consider contacting legal counsel or your state for additional information. Ninja Gig offers employers the ability to easily accept job applications online. Sign up today and experience Ninja Gig free for 14 days.