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Docking
Employee Pay
Know the Rules for
Salary Deduction
What are the rules for
reducing employee pay?
First, you must know the difference between an
exempt and a nonexempt employee.
Department of Labor Fair Labor Standards Act.
Exempt
Generally, these are your
salaried workers. They are not
covered by t...
Nonexempt
These workers are protected by
the FLSA, which specifies
minimum wage and
overtime rules.
They are required by l...
Docking Exempt Employee Pay
Exempt employees are protected from docked pay because
they are not covered under overtime or minimum wage rules.
But that’s not always the case.
Permissible Salary Deductions for Exempt
Employees
• When no work is performed for a workweek.
• When absent for a day or ...
Before you make any
decision on whether to
dock the pay of an exempt
employee, it is essential
to determine if the salary
...
Docking Pay for Nonexempt Employees
Nonexempt employees
are required by law to be
paid the minimum wage
for all hours worked.
They must also be paid
overtime ...
Are you allowed to dock
nonexempt employee pay?
Most employers shy away
from doing so.
However there are cases in
which you are allowed to
dock pay to penalize a
worker f...
Note: An employer
cannot refuse to pay
a nonexempt worker
for any hours that the
person has worked.
If a nonexempt employee is absent from work or misses the
entire workday, you are permitted to dock his or her pay for the...
With all this in mind, the FLSA does not
prohibit employers from cutting a worker’s
hourly wage as a punishment.
As long as the nonexempt
worker is paid the minimum
wage, the employer is allowed
to dock pay by reducing the
hourly wage....
Note: Employers are not
permitted to dock the
pay of a minimum wage
worker who has violated
a company policy.
There is a lot of gray area when it comes to docking pay for
nonexempt employees.
Before doing this, an employer must make sure they
know the ins and outs of the Fair Labor Standards Act,
ensuring that th...
Looking for more
small business tips?
Visit The Payroll Blog.
Easy. Online. SurePayroll.
Discover More
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Rules for Docking Employee Pay

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Do you know the rules for docking employee pay for exempt and nonexempt workers? There can be some gray area and it's important to understand what's permissible by law. This presentation walks you through what you need to know.

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Rules for Docking Employee Pay

  1. 1. Docking Employee Pay Know the Rules for Salary Deduction
  2. 2. What are the rules for reducing employee pay?
  3. 3. First, you must know the difference between an exempt and a nonexempt employee.
  4. 4. Department of Labor Fair Labor Standards Act. Exempt Generally, these are your salaried workers. They are not covered by the Fair Labor Standards Act (FLSA).
  5. 5. Nonexempt These workers are protected by the FLSA, which specifies minimum wage and overtime rules. They are required by law to be paid the minimum wage for all hours worked.
  6. 6. Docking Exempt Employee Pay
  7. 7. Exempt employees are protected from docked pay because they are not covered under overtime or minimum wage rules.
  8. 8. But that’s not always the case.
  9. 9. Permissible Salary Deductions for Exempt Employees • When no work is performed for a workweek. • When absent for a day or longer not related to an accident or sickness. • If a penalty is being imposed for a violation of company policy. • Unpaid suspension for breaking a conduct rule. • If the employee only works a partial week when starting or finishing employment.
  10. 10. Before you make any decision on whether to dock the pay of an exempt employee, it is essential to determine if the salary deduction is permissible by law.
  11. 11. Docking Pay for Nonexempt Employees
  12. 12. Nonexempt employees are required by law to be paid the minimum wage for all hours worked. They must also be paid overtime if they work more than 40 hours in a workweek.
  13. 13. Are you allowed to dock nonexempt employee pay?
  14. 14. Most employers shy away from doing so. However there are cases in which you are allowed to dock pay to penalize a worker for violating a particular policy.
  15. 15. Note: An employer cannot refuse to pay a nonexempt worker for any hours that the person has worked.
  16. 16. If a nonexempt employee is absent from work or misses the entire workday, you are permitted to dock his or her pay for the hours missed. However, you are required to do so based on the normal operating hours of your business as well as the company’s attendance policy. Permissible Cases Where You can Dock Pay for a Nonexempt Worker
  17. 17. With all this in mind, the FLSA does not prohibit employers from cutting a worker’s hourly wage as a punishment.
  18. 18. As long as the nonexempt worker is paid the minimum wage, the employer is allowed to dock pay by reducing the hourly wage. But employers are not allowed to hold back payment for hours that have already been worked.
  19. 19. Note: Employers are not permitted to dock the pay of a minimum wage worker who has violated a company policy.
  20. 20. There is a lot of gray area when it comes to docking pay for nonexempt employees.
  21. 21. Before doing this, an employer must make sure they know the ins and outs of the Fair Labor Standards Act, ensuring that they do not break the law when adjusting the pay of the worker.
  22. 22. Looking for more small business tips? Visit The Payroll Blog. Easy. Online. SurePayroll. Discover More

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