Docking Exempt Pay

pmaher · February 2003

We pay our WA employees monthly. They also are on a 9/80 schedule. Some months they do not work the anticipated hours for that month. In that case, Payroll has deducted their salary by the hours they fell short. YIKES. The employees are now asking why and that this is not fair. I want to rectify this situation but am also concerned that we will end up paying huges amounts of back pay and may get involved in litigation. Also, if they work more than the hours in a month, they get their monthly salary (no overtime).

Any suggestions on how to handle this? How to inform the employees and what to say? I'm not sure how this all came about but I understand it has been a practice for quite some time. I understand that the DOL may give forgiveness for rectifying these situations but not sure about the statute of limitations.

HELP & thanks.

MS HR · February 2003

what exactly is a 9/80 schedule?

pmaher · February 2003

Sorry. 9/80 is every other Friday off. Work 9 hours Monday thru Thursday in week one and 8 hours on Friday; the following week is 9 hours Monday thru Thursday with Friday off.

Rockie · February 2003

You are right to be concerned when it comes to docking time for exempt level employees. What happens is that the exempt employee's exempt level status is lost as soon as this practice starts. The law says if you are going to treat them as an hourly employee, then they should be paid as an hourly employee, including all overtime they have accrued.

In order to correct this, you would need to ascertain how many people this has affected. You will need to then go back and to the best of your ability, figure out how much they would be due back pay, including overtime. If the DOL investigates, they can go back two years, three if it is found to be a willful violation of the law. (That is, you knew about it, but did nothing to correct it).

I would make absolutely certain that this practice is discontinued immediately in order to lessen your liability for payment.

Hatchetman · February 2003

[font size="1" color="#FF0000"]LAST EDITED ON 02-11-03 AT 07:18PM (CST)[/font][p]Correct the inappropriate docking ASAP.

Remember, if they are truly exempt, then, in the private sector, you may only dock the week's salary for full days' absences due to personal reasons or full days' absences due to disability or sickness when you have a paid sick leave policy, plan or practice.

Take a look at the relevant FLSA regulation 29CFR541.118(a)

[url]http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=29&PART=541&SECTION=118&YEAR=1998&TYPE=TEXT[/url]

Or you may dock the weekly salary for partial days' absences that fall under FMLA (in accordance with FMLA regulations).

DOL has what is called the "window of correction." This "window" is provided for at 541.118(a)(6) which permits the employer to reimburse the employees for wrongful docking and a promise to comply with the exempt requirements for docking in the future without jeopardizing the exempt status. The US Supreme Court has upheld that approach.

Of course, consult with legal counsel in doing the correction to make sure it will be consistent with the "window." Hopefully, the docking was being done by Payroll without any policy or wrtten management procedure to say to dock.

pmaher · February 2003

Info is very helpful. I've been trying to track down the "window of correction". Thanks for pointing me to the right reg.

Don D · February 2003

You mention that you pay "WA" employees this way. I infer from that that you have multiple state operations, which further indicates to me that you're not exactly a 'tiny' employer or a mom and pop. So, a secondary concern of mine is a person in the Accounting Department, involved in the payroll process, who knows no better than to do this. If it indeed is a policy she/he was following I would bump the concern up to the level of the writer of the policy. At minimum, the Controller or CEO should insist on a seminar or two for the payroll people on how the law addresses such matters. In today's workplace, every employee involved in HR and Payroll and Accounting should be required to maintain a certain level of competence and periodic refresher training in labor law issues in order to stay in the environment. Just a thought.

Docking Exempt Pay

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