Proper Paycheck Deductions – NC Unpaid Wage Lawyers
Employers, beware: If your employees are salary based, be sure to do your homework when it comes making paycheck deductions. An exempt (salaried) employee is an employee who receives a set pay amount each pay period worked ($455/week is the minimum set by the FLSA). A non-exempt employee should receive overtime pay and must at least be paid minimum wage.
Protection from improper deductions – Unpaid Overtime Lawyers
Federal law gives a very few, specific reasons an employer can deduct from an exempt employee’s salary. If an employer makes deductions from an exempt employee’s salary for reasons not specifically given under Federal law, then the employee’s exempt employment status could be at risk. The risk increases if the employer does not take certain actions to protect themselves when an inappropriate deduction is made.
Employers who have exempt employees should be aware of something called a “safe harbor” policy that the FLSA provides to employers who improperly deduct for reasons not given under federal law. If an improper deduction happens, the employer needs practice the following in order to not have punitive action taken against them:
- Clear policy banning inappropriate salary deductions and offer a way for employees to file alleged improper salary deduction complaints,
- Reimburse employees for improper deductions,
- Makes good faith commitment of intention to comply with the FLSA’s salary deduction rules in the future,
If these policies are followed, the law says the employer will not lose the exempt status unless the employer intentionally violates it or continues to make erroneous deductions after receiving employee complaints.
Saving money and following the law for employee exempt status – Unpaid Minimum Wage Attorneys
Exempt employees can be a smart tool for a business to save money, but only if proper salary deductions are made and clear policies are in place. A good rule of thumb is to always play on the safe side of the law and implement the safe harbor policy before any improper deductions are made. If you do, punishment can be avoided and mistakes are much more likely to be forgiven.