More cases are being litigated over employers deducting unlawfully pay from an exempt employee.  Unlawfully deducting pay from employees classified as “exempt” could mean losing the “exempt” status and a finding that the employee is entitled to payment of overtime wages for all hours worked over 40 per week.

Employers must heed all wage and hour laws, lest they find themselves in expensive and time-consuming litigation.  In one recent case, the Court concluded that the employer failed to pay the employees on a “salary basis,” which the law defines as payment, “on a weekly, or less frequent basis, a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.”

The Court found that the employer violated the “no-docking” rule by having a written policy stating that all employees could be suspended without pay under at least three circumstances, none of which were exceptions to the “no-docking” rule and numerous “exempt” employees had their pay docked for unlawful reasons, such as partial-day absences

Quick Tip:  Pay Now or Pay a Lot More, Later.  Deductions of exempt employees’ pay are permitted only for whole-day absences for personal reasons, absences due to sickness and disability if made in accordance with a “bona fide plan, policy or practice” that provides such benefits, and for suspensions due to violations of major safety rules, as long as there is a published policy. Partial-day deductions are permitted when leave under the Family and Medical Leave Act is taken. 

Violations of wage and hour requirements under the FLSA and Hawai`i state law can result in awards of back pay, interest, liquidated damages, civil penalties, and for flagrant offenders, even criminal prosecution.  Employers are wise to review their pay/disciplinary policies for compliance.

Roman Amaguin, Esq.; romanamaguin@yahoo.com; www.amaguinlaw.com

 




By: ramaguin