Pay Deducts for Exempt Employee

sherrymiller · February 2003

We have an exempt employee who refuses to turn in expense reports for the last several months. We have credit card charges in the amount of over $5000, without expense reports to explain the charges. We would like to payroll deduct the amount of charges incurred by this employee, this would give the employee a zero net payroll check. (This would be done for several checks until the amount of charges is paid). Can we legally do this?

I'm concerned about the employee loosing his exempt status and also not paying the employee at least minimum wage.

Hatchetman · February 2003

[font size="1" color="#FF0000"]LAST EDITED ON 02-19-03 AT 01:12PM (CST)[/font][p]Check your state's laws on what they may say about docking salary to recover unnecessary employer costs created by the employee's actions or lack of them. Fedral FLSA doesn't address this issue, as long as you maintain the minimum SALARY for the week (remember, being exempt means not being covered by either the overtime provisions or the minimum wage provisions of federal law). To keep the exempt status, the minimum weekly salary must be paid, subject to the permissible docking of the salary as described in the FLSA regulations, in order to keep the exempt status. This salary is the one identified in either the short test or the long test that was used to justify the exemption.

Rockie · February 2003

Most states have garnishment laws governing what you can and can't garnish wages for. We could not do this in South Carolina as garnishment is illegal except for income taxes or child support payments. In no instance that I know of, could you take an entire paycheck or where it would take the employee below what minimum wage would be.

I certainly hope you yanked the culprit's credit card. In our organization, this person would, most probably, be terminated for not being able to account for $5,000 worth of charges.

Don D · February 2003

This isn't really an issue of state laws, exemp status tests or withholding. This is an obvious issue of refusal to follow company policy regarding the timely (hopefully you have it identified) filing of expense reports. If there is still non-compliance after one request, this would be a terminating event at the company where I work.

sherrymiller · February 2003

>This isn't really an issue of state laws, exemp status tests or
>withholding. This is an obvious issue of refusal to follow company
>policy regarding the timely (hopefully you have it identified) filing
>of expense reports. If there is still non-compliance after one
>request, this would be a terminating event at the company where I
>work.

I agree totally, and if it were up to me he would have been termed long ago. This person happens to be a relative of close friend of the owner...sticky situation. Thanks for your replies and wish me luck.

Don D · February 2003

Unless the owner has told you that the relative of the close friend is exempt from following company standards, proceed full speed ahead with enforcing your policies. If you sense that you will not be supported up the line, ask the owner straight up, "Is there any reason why Bob should not be expected to follow our expense report policy and procedure?" And, oh...........good luck!

John Vering MO · February 2003

Don't pay less than minimum wage. Disciplining an employee for failing to follow rules is generally acceptable. However, you could face a legal challenge from the deductions under Missouri law. I recommend getting advance written approval before doing deducts.
John Vering
Mo-co-editor

Pay Deducts for Exempt Employee

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