Employer prohibited from docking exempt employee’s pay for being tardy!
0December 16, 2024 by Tom Roberts, Esq.
Employers at risk for paying overtime when they dock "exempt" employees pay for being tardy or late!
Regulations promulgated by the Secretary provide that an employee is employed in a “bona fide executive, administrative, or professional” capacity only if he or she is compensated on a “salary basis.” 29 C.F.R. §§ 541.1(f), 541.2(e), 541.3(e)).
“An employee will be considered to be paid ‘on a salary basis’ . . . if under his employment agreement he regularly receives each pay period 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.” 29 C.F.R. § 541.118(a). Deductions from pay in less than one week increments for disciplinary violations are inconsistent with compensation on a salary basis. 29 C.F.R. § 541.118(a) The employee must receive his full salary for any week in which he performs any work without regard to the number of days or hours worked. The Secretary is of the view that employees whose pay is adjusted for disciplinary reasons do not deserve exempt status because . . . true ‘executive, administrative, or professional’ employees are not ‘disciplined’ by piecemeal deductions from their pay. See Auer, 519 U.S. at 456.
The regulation allows for a “window of correction,” see Martin, 949 F.2d at 616, so that when “a deduction not permitted by [the regulation] is inadvertent, or is made for reasons other than lack of work, the exemption will not be considered to have been lost if the employer reimburses the employee for such deductions and promises to comply in the future.” 29 C.F.R. § 541.118(a)(6). However, the window of correction is not available if an employer “engages in a practice of making impermissible deductions in its employees’ pay, or has a policy that effectively communicates to its employees that such deductions will be made.” Klem v. County of Santa Clara, 208 F.3d 1085, 1091 (9th Cir. 2000) (internal quotation marks omitted) (detailing Secretary’s interpretation of the window of correction rule); see also Martin, 949 F.2d at 616-17 (denying “window of correction” where employer had policy of docking pay for missing work).
To interpret the rule otherwise would allow an employer to treat its employees as exempt for overtime purposes while, at the same time, intentionally failing to comply with the “salary basis” rule. In the event that its employees sued for overtime pay, such an employer simply could use the window of correction to comply retroactively with the salaried-basis requirements. According to the Secretary, such a result would render the “salary basis” rule “essentially meaningless” and run counter to the rule that FLSA exemptions are to be construed narrowly.
Klem, 208 F.3d at 1092.
Yourman v. Giuliani, 229 F.3d 124, 127-128 (2000)
Overtime Compensation - If your employer deducts or docks your salary for being late, you may be entitled to overtime compensation even if your employer classified you as "salaried" or "exempt" for overtime!!
The Fair Labor Standards Act entitles employees to time-and-a-half overtime for hours worked in excess of forty hours per week, see 29 U.S.C. § 207(a)(1), except for those employees “employed in a bona fide executive, administrative, or professional capacity,” see id. § 213(a)(1). The Secretary of Labor has “broad authority to ‘define and delimit’ the scope of the exemption for executive, administrative, and professional employees.” See Auer, 519 U.S. at 456 (alterations in original) (quoting 29 U.S.C. § 213(a)(1)).
Regulations promulgated by the Secretary provide that an employee is employed in a “bona fide executive, administrative, or professional” capacity only if he or she is compensated on a “salary basis.” 29 C.F.R. §§ 541.1(f), 541.2(e), 541.3(e)). “An employee will be considered to be paid ‘on a salary basis’ . . . if under his employment agreement he regularly receives each pay period 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.” 29 C.F.R. § 541.118(a).
Yourman v. Giuliani, 229 F.3d 124, 127-128
Virginia Employees: If you and your fellow "exempt" or "salaried" employees are being docked for being late to work, and regularly work more than 40 hours per week, you may be entitled to overtime compensation -- if so, you may entitled to an award for all that time at 1 1/2 times the effective hourly rate, plus a penalty of 2 x's that amount in addition to attorneys fees!
Class action for FLSA violations require each employee to “opt in” that is to join the class action. So, if you have a group of fellow employees that want to hold the employer accountable to pay you under the law, give use a call.
Employer from retaliating --- BUT TO BE SAFE, better to come as a group!
Employers are prohibited from retaliating against you because of your opposition to its unlawful employment action under the FSLA, but we all know that they do, so its best if you come as a group – safety in numbers!!
Document all of your overtime!! When you go to an attorney, take the best accounting of your overtime hours, and a list of ways to prove it (security camera's, key cards, etc)
Ultimately, you will have to prove how many hours of overtime you worked, so gather as many of those proofs as you can. Parking receipts, phone records, etc.
Thomas H Roberts & Associates, PC
105 S 1st St
Richmond, VA 23219
804-783-2000
Disclaimer
The materials are prepared for information purposes only. The materials are not legal advice. You should not act upon the information without seeking the advice of an attorney. Nothing herein creates an attorney-client relationship.
Category Contract Law, Employment Law, General | Tags: employer may owe overtime if docking "exempt" employees for being late, exempt employees not docked for tardy, flsa
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