Human Resources, Payroll

Docking the pay of Your Overtime Exempt Workers

The FLSA pay-docking rules are fairly unclear. Usually, they don’t permit deductions from an overtime exempt employee’s salary. The regulations state that the amount of money an overtime exempt employee earns cannot be dependent on the number of days or hours they’ve worked. Also, you cannot deduct money based on the quality or quantity of work produced. However, there are a few ways to legally dock pay if you have written policies in place BEFORE the pay-docking situation occurs.

The good folks over at TrackSmart gave us some help explaining  situations in which you can dock pay.timemoney

  • Exempt employees do not need to be paid for any workweek in which they perform no work.
  • Exempt employees who are absent for a day or more for personal reasons other than sickness or accident.
  • (Note that these deductions must be made only in full-day increments – not for partial-day absences.)
  • Exempt employee absences of a day or more caused by sickness or disability, if the company maintains a plan that provides compensation for loss of salary caused by sickness and disability and the employee exhausted his or her “bank” of leave.
  • Penalties imposed for violation of safety rules of major significance
  • To offset any amounts received by an employee as jury or witness fees or military pay; however, beyond those offsets, deductions may not be made for absences caused by employee jury duty, attendance as a
  • witness or temporary military leave.
  • Unpaid disciplinary suspensions of one or more full days for breaking workplace conduct rules.
  • Partial weeks worked during the initial or final weeks of employment. For example, if Joe resigns in the middle of a workweek, pay him only for the days actually worked in that week.
  • In some cases, when a salaried/exempt employee has worked a reduced or intermittent work schedule under the Family and Medical Leave Act (FMLA). (You can convert a salaried employee to an hourly rate during the time he or she is on intermittent or reduced-workweek FMLA leave without destroying the person’s exempt status.)

Red Flags

A few specific deductions are FLSA red flags. These deductions can make a formerly OT-exempt employee eligible to collect overtime – possibly going back as much as 3 years!

  • Business trips. You can’t deduct salary (or run the clock on paid time off benefits) for absences related to business trips, and
  • Lack of work. If an exempt employee is ready, willing and able to work, you can’t deduct money for slow times when there’s little or no work assigned.
  • You cannot deduct pay for days spent on jury duty or if  they have been summoned to court as a trial witness.

If a business accidentally makes an occasional  improper deduction, it’s okay as long as errors are caught and corrections are made. But, if there are repeat violations, the FSLA can turn a department of overtime exempt workers into OT- eligible.

There are other docking rules out there for specific situation. So, know your DOL Wage and Hour laws and steer clear of the pitfalls many employers encounter because  they don’t know what they don’t know.

Until Next Time, Be Audit-Secure!

Lisa Smith


Lisa Smith is CEO of Andere Development, LLC and Chief Content Developer at BeAuditSecure.com. Follow her on Twitter, connect with her on LinkedIn, listen to her Small Business Spoonfuls Podcast, and find more from her in Audit-Secure Assistant at BeAuditSecure.com.


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