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Exempt Employee Pay Deductions Policy


In accordance with the Fair Labor Standards Act regulations, exempt employees who are required to be paid on a salary basis may not have their pay reduced for variations in the quantity or quality of work performed.

Provisions Mandated by the Salary Basis Rules

  • Exempt employees must generally receive their full salary for any week in which they perform any work, without regard to the number of days or hours worked. However, exempt employees need not be paid for any workweek in which they perform no work at all for the organization.
  • Deductions from pay cannot be made as a result of absences due to the circumstances listed below. Such improper pay deductions are therefore specifically prohibited by [Company Name], regardless of the circumstances. Managers or supervisors violating this policy will be subject to investigation of their pay practices and appropriate corrective action in accordance with normal procedures.
    • Jury duty.
    • Attendance as a witness.
    • Temporary military leave.
    • Absences caused by the employer.
    • Absences caused by the operating requirements of the business.
    • Partial day amounts other than those specifically discussed below.
  • The few exceptions to the requirement to pay exempt employees on a salary basis are listed below. In these cases, deductions may be permissible as long as they are consistent with other company policies and practices.
    • Absences of one or more full days for personal reasons other than sickness or disability (partial days must be paid).
    • Absences of one or more full days due to sickness or disability.
    • Fees received by the employee for jury or witness duty or military leave. These fees may be applied to offset the pay otherwise due to the employee for the week. No deductions can be made for failure to work for these reasons, however.
    • Penalties imposed by infractions of safety rules of major significance.
    • Unpaid disciplinary suspensions of one or more full days in accordance with [Company Name]'s disciplinary policy.
    • Deductions for the first and last week of employment, when only part of the week is worked by the employee, as long as this practice is consistently applied to all exempt employees in the same circumstances.
    • Deductions for unpaid leave taken in accordance with a legitimate absence under the Family and Medical Leave Act.

Complaint Procedures

  • Employees who believe their pay has been improperly reduced should contact [name of HR professional or other designated company representative] immediately to request an investigation.
  • The employee will be asked to specify in writing, using the guidance above, the circumstances of the pay deduction and whether it has occurred on other occasions.
  • [Company Name] will review pay records and interview the supervisor or manager, as well as the payroll representatives handling the employee's pay, to determine if the allegation is correct.
  • If the deduction was in fact improper, the company will reimburse the employee as promptly as possible (but in no case longer than two pay periods from the identification of the problem).
  • The individual(s) responsible for the error will be investigated further to determine if this was an isolated incident or a pattern of conduct that requires further action on the part of the company. If warranted, the responsible person(s) will be held accountable for the error(s) made consistent with company disciplinary policy.
  • The resolution of the situation will be documented (including confirmation on the part of the employee that the situation has been resolved) and placed with the employee's pay records.

Following the identification of such a problem, [Company Name] will establish a practice to regularly audit employee pay records to ensure no further issues arise.



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