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.

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QUESTIONS

  • An employee has quit working for me and has equipment belonging to me. The employee has been paid through his last day worked but demands additional money before he will return my equipment. Is this legal?
  • During my current 6 months of employment, I was hired as a 1099 employee and then transitioned to a W2 employee (paid salary + commission)and then forced back to a 1099 employee by my employer. Despite earning commissions from the first month of employment, I have yet to be paid any commissions. They initially told me I they would pay them and then they ignored by requests for payment. Can an employer withhold and deny paying earned commissions and if so, how long. Are they subject to any penalties or fines for will fully with holding earned commission? What can I do?
  • I was hired to work 8:30am to 5pm at a daycare and when i get there if there is not enough kids they will make me wait to start my shift until there are enough kids or work to do, the hours i am waiting are not being paid. I have also got in trouble for leaving the building if i am told i cant start yet. They want me to sit there and wait unpaid for sometimes up to 3 hours. I have brought this up to my manager but i feel they are taking advantage of my age because i am only 19
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