Wage Claims Article


Allowable Deductions for Exempt Employees

Background:  The Fair Labor Standards Act (the FLSA) contains rules regarding overtime, including which job positions are non-exempt versus exempt, and it dictates that employees in non-exempt job positions receive overtime pay.  In contrast, the FLSA does not require employers to pay overtime to employees in exempt job positions regardless of how many hours they work.  The FLSA lists factors that indicate whether a job should be treated as exempt from overtime or as non-exempt (which require overtime pay for extended work hours).  This article is written for exempt employees and more particularly this article focuses on the circumstances that would permit your employer to reduce (“dock”) your compensation when you miss work. 

The Basic Rule:  The starting point is that an exempt employee’s salary in any week in which he or she performs any work duties at all cannot be reduced by the time not worked so long as the employee was ready, willing and able to work.   For example, if you, an exempt employee, are ready to work but inclement weather shuts down roads and shutters your building for some portion of your workweek, you must be paid your full week’s salary.   The basic rule is that if you worked any part of a week and are kept from work for some portion of it through no fault of your own, then you must be paid as if you had worked the full week.

Exceptions to the Basic Rule:  The old platitude that rules are meant to be broken holds true here.  There are seven rule breakers that allow your employer to reduce your (an exempt employee’s) weekly salary. 
  1. If you, an exempt employee, are absent from work for one or more full days for personal reasons (other than sickness or disability, which are addressed below), your salary that week may be reduced in full day increments.  If you work any part of a day, you must be paid for the full day.
  2. If you are absent from work for one or more full days due to sickness or disability, your salary for the week in which those absences fell may be reduced but only if the company provides wage replacement benefits for these types of absences under a bona fide plan, policy or practice.
  3. In weeks where you take unpaid leave pursuant to the Family Medical Leave Act, your compensation will be reduced pursuant to the FMLA policy in place for all employees, which may mean your salary could be reduced in less than full day increments.
  4. If you miss work to report for jury duty, to serve as a witness or to perform military service, your weekly salary may be reduced by the amount of any payment you received from your service. 
  5. Your weekly salary may be reduced by the amount of any penalty imposed in good faith against you for violating safety rules of major significance.
  6.  If you have an unpaid suspension imposed in good faith against you for violations of written workplace conduct rules, your weekly salary may be reduced in line with the duration of the suspension.
  7.  If your first and final week of work are not full weeks, your compensation may be reduced accordingly.

As a reminder, the above exceptions are for absences other than those lasting a full workweek.  The law does not require employers to pay exempt employees for full-week absences.

Who To Turn To For Help:  The FLSA rules limiting the circumstances in which an exempt employee’s salary may be reduced due to an absence are fairly complex.  Inadvertent errors are certain to occur.  If you think that your salary may have been docked where the law precludes it, you may want to talk with an attorney knowledgeable about wage and hour laws.  Another option available to you if you have questions about the wage and hour laws and your rights under those laws is to call the Wage and Hour Division of the Department of Labor.  The telephone number for the DOL office in Arizona is 1-602-514-7100, or call the agency’s toll-free help line at 1-866-487-9243.    

Contributing Attorney Writer: Shirley Kaufman is an attorney at Faulkner Law Offices, PLLC where she focuses on employment law.

Comments:

QUESTIONS

  • My employer has us keep receipts (tickets with the food orders written on them) she is threatening to take $100 for every ticket that gets lost. More than 3 different employees handle these tickets along side the cashier daily. Is this legal for her to take $100 from the cashier if a ticket gets lost?
  • I worked as in Independent Contractor and was just let go by the owner, when does he have to pay me for services? Is it the same as if I were an employee? (within 24 hours)? Thanks,
  • My employer has us keep receipts (tickets with the food orders written on them) she is threatening to take $100 for every ticket that gets lost. More than 3 different employees handle these tickets along side the cashier daily. Is this legal for her to take $100 from the cashier if a ticket gets lost?
  • My employer provides hand written payroll checks every 2 weeks, however has never provided me with a paystub. In reading statutes, I was only able to find specific language regarding wage statements being required for electronic deposits. Annual statements are provided, however I have found discrepancies on these statements (amounts not matching checks received, pay dates missing from statements, pay dates listed on statement that weren't actually pay dates, incorrect taxes withheld). I have requested regular pay stubs, but they will not provide them. What can I do?
  • i was never paid what do i do
  • Can a company not pay overtime (over 40 hrs a wk)if they are a courier company and the employee is paid a hourly wage instead of per package? How does that work?
  • i recently quit a job because my employer altered my contract without my permission and presented it as the original . now she won't pay me my last paycheck. is there an organization that can help me with a inexpensive lawyer (at least for a consultation) or should i take this to small claims court?
  • My employer will not provide me with any information such as: how mucht I was payed per hour, how many hours I worked, and if taxes were taken out. Paid by personal check. What do I do?
  • I work in outside sales. For a number of years my employer has deducted shipping costs from my commission for all accounts outside the metro area. Recently they have begun deducting the % of $ credit charges cost from my commission as well. They deduct this before my paycheck is cut. For example they show me a spreadsheet with my compensation as $7000.00 -500 shipping -500 cc fees (and sometimes other deductions) = $6000.00 since these fees are deducted can i write them off on taxes and is this even legal?
  • My employee quit without giving required two weeks notice. In contract that he signed, it says specifically that if he quits without notice, I as an employer have a right to deduct from his final paycheck any costs incurred by his resignation. Employee agreed to this and signed the contract, but now he demands full payment. Can I reduce his pay? I had to cover his work by hiring a replacement

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  • He told me that I could actually get all the money I needed by using my home as collateral. . .
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