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Can employers dock the pay of salaried, nonexempt employees for absences?

Possibly. Nonexempt employees may be paid an hourly rate, a piece rate, a day rate, by commissions or by salary, as long as compensation is at or above minimum wage and overtime is paid accordingly.

When an employer pays a nonexempt employee a salary, the fixed salary is either based on working a set number of hours for a specific period (e.g., week, month) or working a fluctuating workweek, in which case the work hours may vary up and down each week.

When a nonexempt employee is paid a salary for a set number of hours per week, an employer may dock the pay when the employee is absent and does not work the agreed-on hours. For example, Ruhal is hired at a salary of $500 for a regularly scheduled five-day, 40-hour workweek. Ruhal's regular rate of pay would be $12.50 per hour ($500 / 40 hours). Ruhal called in sick one day last week. Because he did not have sick leave to cover his absence, his salary for that week would be $400 (32 hours x $12.50).

When a nonexempt employee is paid a salary for a fluctuating workweek, the salary is meant to cover any hours worked, whether few or many. Under this method, an employer is normally not allowed to dock pay when an employee is absent. The U.S. Department of Labor (DOL) has taken the position that employers paying a salary for a fluctuating workweek are not permitted to make deductions for absences occasioned by the employee (i.e., absences for personal reasons, illness or injury). See DOL Opinion Letter FLSA2006-15.

The salary is intended to be straight-time compensation for all hours worked. The regular rate of pay per hour will vary week to week. For example, Yvette is hired at a salary of $500 to work a varying schedule. Last week, Yvette worked 38 hours and was paid $500. Her regular rate of pay that week was $13.15 per hour ($500 / 38 hours). Yvette worked 30 hours this week. She scheduled a day off due to personal issues. Yvette did not have paid leave to cover her absence, but she will still receive $500. Her regular rate of pay will be $16.66 per hour ($500 / 30 hours). Yvette is paid a fixed salary of $500 regardless of the number of hours she works per week.

Employers are permitted to make occasional disciplinary deductions for willful tardiness and absences that are not authorized by the employer, as long as the deductions do not bring the employee below minimum wage. If an employer makes frequent deductions from an employee's fixed salary, it will likely be perceived by the DOL that the employer is paying a salary based on a set number of hours rather than on a fluctuating workweek.

Employers and nonexempt employees should have a clear understanding and agreement of what hours and period the salary will cover to ensure accurate wage payments. Although an agreement is not required to be in writing, it is recommended.


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