When Can You Deduct Pay From Exempt Employees?
In certain circumstances, an exempt employee can have his pay reduced just like a non-exempt worker. An employer must be careful when attempting to lower the wages of an exempt employee or when attempting to dock pay. Reducing an exempt employee's salary could end costing the employer much more than if he'd just paid the employee the proper day's wage.
Other People Are Reading
-
Deducting Pay
-
The law allows you to lower the wages of any worker, including an exempt employee, at will as long as you are not violating any laws relating to wage discrimination. It is illegal for you to lower the wages of an employee for reasons relating to gender, race, country of origin, age, religion, marital status or disability. You must must carefully consider whether to lower the wages of an exempt employee who may be able to make a case that her salary reduction occurred for any of the above criteria.
Dangers of Lowering Exempt Pay
-
An employee must earn at least $23,600 annually or $455 weekly to earn exempt employee status. If you lower the wages of an exempt employee below this amount, you may make the employee non-exempt under the Fair Labor Standards Act. If this occurs, the employee is then eligible for all protections granted to a non-exempt worker including overtime pay. This right to overtime pay occurs whether or not you realize your lowering of the exempt employee's salary changed the worker's status. You could be liable for significant sums of money if you do not make the appropriate overtime payments due.
-
Sick Days and Disciplinary Reasons
-
It is permissible for you to deduct pay from an exempt employee if the employee misses a full day of work due to illness, for personal reasons or to manage a disability. You may also deduct pay from an exempt employee when you are imposing a penalty in good faith for a major work safety violation. You cannot force the exempt employee to work for free, but you can suspend the worker for a finite period without pay. You are also not required to pay an exempt employee for any time off taken under the Family and Medical Leave Act.
Jury Duty and Military Pay
-
You may deduct a portion of an exempt employee's pay to compensate for any pay given to the employee from jury duty or temporary military duty. If an employee is a member of the National Guard, he may be called to serve temporarily in the event of a natural disaster or state of emergency. You are allowed to deduct whatever pay he receives from this temporary deployment from the exempt employee's paycheck from your business.
-
