Original Date: December 3, 2018
Exempt employees receive the same amount of predetermined compensation each pay period; weekly, biweekly, semi-monthly or monthly, depending on the payroll processing cycles within our organizations. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work. Exempt employees do not need to be paid for any workweek in which they perform no work. The exceptions/circumstances listed below are the only reasons an exempt employee does not receive full pay, regardless of the number of hours and days worked in the week. Before implementing such practices, review state and local law to ensure all is legal.
Below are 5 circumstances for deductions in exempt employee’s pay:
- “Deductions from pay are permissible when an exempt employee: is absent from work for one or more full days for personal reasons other than sickness or disability; for absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness;
- to offset amounts employees, receive as jury or witness fees, or for military pay;
- for penalties imposed in good faith for infractions of safety rules of major significance; or for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions.
- Also, an employer is not required to pay the full salary in the initial or terminal week of employment,
- or for weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act.”[i]
The employer will lose the exemption if it has an “actual practice” of making improper deductions from salaried exempt level employees. There are safe harbor provisions within the U.S. Department of Labor rule, which recommends having policies in place to ensure improper deductions are not taken and good faith efforts are made to address any improper deduction errors or mistakes. Prior to deducting from an exempt employee’s pay, ensure you have reviewed state and local laws and regulations, as mentioned above. These deductions should be made on a consistent basis throughout the organization. I have rarely seen deductions from exempt employee’s pay except for FMLA days and terminal weeks of employment.
Additional Resources:
NY State Opinion Letter
NY State Deduction from Wages
Fact Sheet #17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA)
– Matthew Burr, HR Consultant
[i] https://www.dol.gov/whd/overtime/fs17g_salary.pdf
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Published by Mathew W. Burr, MJ-LEL, MBA, MHRIR, GPHR, SHRM-SCP, SPHR, CPHR
Matthew Burr has over eleven years of experience working in the human resources field, starting his career as an Industrial Relations Intern at Kennedy Valve Manufacturing to most recently founding and managing a human resource consulting company; Burr Consulting, LLC. Prior to founding the consulting firm, the majority of his career was spent in manufacturing and healthcare. He specializes in labor and employment law, conflict resolution, performance management, labor and employment relations. Matthew has a generalist background in HR and provides strategic HR services to his clients, focusing on small and medium sized organizations. He is a retired Assistant Professor of Business Management from Elmira College, an Adjunct Professor at Alfred State University and Collin College. Matthew is also the SHRM Certification Exam Instructor at the college, his students currently have an 80% pass rate on the SHRM-SCP and 92.3% pass rate on the SHRM-CP. Matthew works as a trainer Tompkins Cortland Community College, Corning Community College, Broome Community College and Penn State University. He also acts as an On-Call Mediator and Fact-Finder through the Public Employment Relations Board in New York State, working with public sector employers and labor unions.
Matthew has publications at the Cornell HR Review, Business Insider, New York State Bar Association, Expert 360 (in Australia). In early 2017, he published his first book, “$74,000 in 24 Months: How I killed my student loans (and you can too!).”
Matthew has an associate's degree in business administration from Tompkins Cortland Community College, a Bachelor of Science degree in business management from Elmira College, a master's degree from the University of Illinois School of Labor and Employment Relations in Human Resources & Industrial Relations and a Master’s in Business Administration specializing in entrepreneurship from Syracuse University. He currently holds a Lean Six Sigma Green Belt, Senior Professional in Human Resources (SPHR), Global Professional in Human Resources (GPHR) and the Society of Human Resource Management Senior Certified Professional (SHRM-SCP) certifications.
Matthew has been featured on CNN Money, Fast Company, Fits Small Business, Magnify Money, My Twin Tiers, Namely, Student Loan Hero, Smart Sheet and CEO Blog Nation.
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