Exceptions. Deductions from Exempt Employee’s Salary . . . . Again.

Last time we talked about the general rule regarding the Salary Basis Test. Remember, According to the regulations, to meet the salaried basis test, your employee has to “receive each pay period . . . a predetermined amount . . . which is not subject to reduction because of variations in the quality or quantity of the work performed.” The regulations go on to say “Subject to the exceptions provided in paragraph (b) of this section, an exempt employee must receive the full salary for any week in which the employee performs any work without regard to the number of days of hours worked.”

Hold it just a second, what do you mean EXCEPTIONS PROVIDED IN PARAGRAPH (b)? That’s right, there are exceptions. Wouldn’t be a very good rule if there were no exceptions now would it? So what are these exceptions you ask? Well let me just tell you. You can make a deduction from a salaried employee’s pay for:

  • Absences of one or more full days for personal reasons, not sickness (NOT ½ DAYS, FULL DAYS, so if the employee is out for a day and a half you can only deduct for the full day);
  • Absences of one or more full days for sickness, if you have a sick pay plan that replaces the pay;
  • Off sets (not full day deductions) for amounts received for jury duty, military leave or attendance as a witness;
  • Penalties imposed in good faith for infractions of safety rules of MAJOR SIGNIFICANCE (one of the examples given is smoking in the explosives plant);
  • Unpaid disciplinary suspensions of one or more full days imposed in good faith for infractions of workplace conduct rules in accordance with a WRITTEN POLICY APPLICABLE TO ALL EMPLOYEES;
  • Time not worked in the first or last week of employment;
  • Time not worked when an employee is on FMLA LEAVE.

29 CFR §541.602(b).

So, if the employee is paid on a salaried basis how on earth do you decide what to deduct?

When calculating the amount of a deduction from pay allowed under paragraph (b) of this section, the employer may use the hourly or daily equivalent of the employee’s full weekly salary or any other amount proportional to the time actually missed by the employee. A deduction from pay as a penalty for violations of major safety rules under paragraph (b)(4) of this section may be made in any amount.

29 CFR §541.602(c).

OK, now before you get all worked up, let me throw in this caution. You mess these up and take an improper deduction and you have a problem. A big problem. So, before you do any of this CALL YOUR LAWYER. And stick around for next time when we talk about what happens if you do mess this up.

 

And if all of this seems familiar, it is. I posted this before. You can see it here.