Tuesday, June 19, 2007

Proceed with caution if docking employees' pay

Eve Tahmincioglu of msnbc.com has posted this article, in which she advises employees, "Employers can legally reduce salary, fine workers for infractions." She states that more employers are fining employees or docking their pay as a means to control employees and better enforce work rules. Nevertheless, I caution that anyone reading this blog tread very carefully before adopting this advice for your company. While such a practice is permitted under the federal Fair Labor Standards Act, I have grave concerns as to whether it would pass muster under Ohio's wage payment statute. The Ohio law only permits paycheck deductions in certain specific circumstances, none of which on their face cover disciplinary docking of pay.

Moreover, this practice also raises issues under the FLSA. Docking exempt employees' pay could jeopardize their exempt status. You do not want to put an employee's exempt status in jeopardy under any circumstances, for fear of owing back overtime for any hours worked in excess of 40 for all work weeks for up to two years. Such a mistake could prove very costly.

Employers who are considering docking employees as discipline for work rule violations should not do so without having their counsel draft a carefully worded document for employees to sign that explains the penalties and authorizes the deductions from their wages. Companies should also consider the effect such a program could have on employee morale and retention.