If an employer’s managers are exempt from the overtime requirements of the Fair Labor Standards Act, they must receive a regular salary and the employer can’t reduce that salary because they miss a few hours of work. If, on the other hand, these managers don’t qualify for the overtime exemption, you must pay them time and one-half for all hours worked in excess of 40 hours per workweek. However, the employer is also free to reduce the managers’ pay for hours they don’t work.
To be exempt from FLSA’s overtime requirement, executive, administrative, and professional employees must meet the standard test for their classification and be paid no less than $455 a week for any week in which they perform any work, regardless of the number of days or hours worked.
The employer can’t reduce an employee’s salary for showing up late, leaving early, or taking extended lunches, unless the employer wants to risk losing that employee’s exempt status and the exempt status of employees in similar jobs. Also the employer could potentially pay a significant amount of back-overtime to affected employees. To discourage employees from taking long lunches or leaving early, consider utilizing the employer’s disciplinary process to address these matters.
The penalties associated with docking an exempt employee’s salary will depend upon the circumstances associated with the reduction of salary. If the salary deductions are based on the quality or quantitiy of work performed, the Department of Labor may view this action as a lack of intent to pay on a salary basis. The employer could lose the overtime exemption for the employee and other employees in similar jobs for the entire period that the improper deductions were made.
Information for this blog provided by The Bureau of National Affairs.
Content written by Jeffrey M. Krauss, Co-Owner, The HR Office, Inc.
