Most employers know that salaried employees are not entitled to overtime, and, as a result cannot generally have their salary reduced based upon missed work hours. If an employer regularly cuts the pay of a “salaried” employee based upon missed work hours, courts may find that the employee is actually an hourly employee entitled to overtime under the Fair Labor Standards Act. Nevertheless, there are always exceptions to every general rule. In certain circumstances, the pay of exempt employees can be reduced. Here are a few examples:
- If an employer has a policy that provides compensation for loss of salary caused by illness or childbirth, salary can be reduced if the employee exhausts his/her leave bank.
- In appropriate circumstances, salary can be cut based upon violations of work rules.
- If the employee fails to perform any work in a work week, the employer is not required to pay salary.
These exceptions and others depend upon the facts of each case. Consult with your attorney before docking the pay of an exempt employee.