Fair Labor Standards Act

Federal Law offers protection to those employers who inadvertently violate the Fair Labor Standards Act

We've all heard the expression that "ignorance of the law is no excuse." While that saying still holds true, federal regulation 29 CFR 541.603 offers some remedial safe guards to those employers who may inadvertently violate the Fair Labor Standards Act by deducting a salaried employee's pay.

With its vast array of provisions and requirements, its easy to understand how an employer may mistakenly violate the terms of the Fair Labor Standards Act. Particularly, there are certain classes or types of employees who are subject to the requirements of the FLSA and those who are not. Employees subject to regulations such as overtime pay and minimum wage, are called "non-exempt" employees; but those employees who are not subject to rules of the FLSA are called "exempt" employees.

According to the rules an employee may be exempt if he/she falls within a certain classification of employment, earns a particular salary grade and receives a weekly, predetermined salary which is "not subject to reduction because of variations in the quality or quantity of work performed." Generally speaking an employer does not have to pay this person overtime compensation; however, there are cases in which the actions of the employer would convert an otherwise "exempt" employee (no overtime pay required) into a "non-exempt" employee requiring the employer to pay the employee for past and future overtime earned.

For example, an employer may improperly discipline an exempt employee by deducting that employee's pay for partial days missed. In certain instances, reducing a salaried employee's pay for partial days missed (i.e.- 4 hours in the morning, 3 hours in the afternoon) may result in changing that person from an "exempt employee" into a "non-exempt employee" because it is an affirmative act by the employer as treating an otherwise salaried employee as an HOURLY employee. Therefore, the employee would be entitled to hourly overtime compensation.

How can an employer repair this inadvertent mistake? Federal regulations provide the procedure an employer must follow in order to maintain the employee's exempt status despite the improper deductions in pay.

First, the employer must "clearly communicate" a policy which prohibits partial pay deductions to its exempt employees. Secondly, the employer must provide its employees with a "complaint mechanism" by which the employees can express their concerns/comments to the employer. Thirdly, the employer must return that portion of income deducted and make a commitment to comply in the future. And finally, the employer must avoid willfully violating the improper deduction policy after receiving the employee complaints.

Although the safe guard regulation may not aid the employer from committing the initial offense, it definitely prevents any further damage resulting from an otherwise innocent mistake. To better protect your company, contact the attorneys at BENCKENDORF & BENCKENDORF, P.C.