Employers use a variety of tools to manage their workers. Sometimes, employers choose to institute deterrents in the form of reductions in pay (docking) for unproductive habits or inappropriate behaviors in the workplace.
While employers do have the ability to increase and decrease wages, when an employee’s pay is docked as punishment, employers might be breaking the rules outlined in the Fair Labor Standards Act (FLSA). This determination is most important depending upon if the employee is considered exempt or non-exempt.
The FLSA determines wage and hour laws for nonexempt employees. For example, employers must pay nonexempt employees at least the federal minimum wage as well as earned overtime for work that exceeds 40 hours a week. Employees who are exempt from the FLSA are not entitled to overtime pay or the federal minimum wage.
Can the Pay of a Salaried Employee be Docked?
If an employee is exempt from the FLSA, then the employee’s salary generally cannot legally be docked absent certain situations. Some examples of exempt employees include executives, administrators, professionals, and some IT employees. To qualify as exempt, you must meet certain requirements relating to job duties and must be paid on a salary basis. In short, federal law prohibits an employer from docking the pay of an exempt employee because of the “quality or quantity” of the work in question.
The FLSA allows employers to make deductions from an exempt employee’s salary under very limited circumstances. Among other instances, when an employee is absent due to personal reasons, sickness, or disability for a day or more, when an employee must perform jury duty, and when an employee is suspended.
Many times, the FLSA can be complex and difficult to navigate. As a business owner, it is critical that you have an employment attorney on your side who completely understands all of the nuances of both the FLSA and any applicable state laws relating to employee wages and deductions.
One such state law in Texas is the Texas Payday Law which governs deductions from wages for all employees. This law allows an employer to make certain wage deductions, such as federal income tax withholding or court-ordered garnishment for child support owed.
For the most part, employees in Texas must give written authorization for all other wage deductions. Sometimes employment contracts can include language that will determine payment and deduction interactions between the employee and employer. A lawyer experienced in Texas employment and business law can help you craft that language.
Will My Business Face Penalties for Docking an Employee’s Pay?
If you are facing a complaint from an employee about improper wage docking, the court will consider a handful of factors, including the number of alleged improper pay deductions, the length of time the pay deductions were in place, and how many employees were affected.
In addition to these logistical considerations, a court may also want to know how well you explained salary deductions to your employees by reviewing any employer policies on permissible and impermissible deductions.
A court will look to an employer’s actions, as well. Did you explain to your employee the policies and expectations in place regarding pay deductions ahead of time? Have you encountered similar issues in the past and received penalties for improperly deducting employees’ pay?
Talk to an Employment Law Attorney
Before an issue arises about docking an employee’s pay, discussing your company’s pay deduction policies with an employment law attorney could be helpful. Even if you are now facing an employee dispute about pay reduction, it is not too late to talk with a skilled attorney. Contact Simon | Paschal PLLC today for assistance with your organization’s employment and business law concerns.