Library Law: FLSA Exempt Employees and Attendance

by James W. Fessler and E. Kenneth Friker

The federal Fair Labor Standards Act (FLSA), sometimes called the “overtime law” and which is intended to protect hourly wage earners, imposes several restrictions on how employers, including libraries, treat their employees.  Employees are, however, exempt from the FLSA requirements if they meet the tests of various classifications, receive a certain amount of pay and (1) receive their “full salary for any week in which [they] perform any work” at least weekly in (2) an amount that is “predetermined” and “not subject to reduction because of variations in the quality or quantity of the work performed.”

Typically, employers do not want to inadvertently convert an FLSA exempt employee into a non-exempt employee and subject themselves to more regulations.  One way that employers can convert an FLSA exempt employee into a non-exempt employee is by docking the employee’s salary for attendance issues.  This article identifies the means that employers can use to dock an FLSA exempt employee’s pay for attendance issues without converting them into non-exempt employees.

Perhaps your library has an FLSA exempt employee who misses a full eight-hour day of work without any excuse.  What can and can’t you do?

Partial Day Pay Reduction.  Generally, an employer cannot reduce an employee’s pay for a partial day because doing so would convert an FLSA exempt employee into a non-exempt employee and make them eligible for overtime pay.

Full Day Pay Reduction.  An employer can reduce an employee’s pay for a full day.  In this case, the employee’s pay can be reduced proportionately.  Ordinarily, one-fifth of the employee’s weekly salary can be reduced for each unexcused absence.

Week Long Suspension.  An employer can reduce an employee’s pay for a full week, if the employee does not work that week, perhaps due to a week long unpaid disciplinary suspension.  In this case, the employer’s disciplinary policies should expressly clarify that exempt employees may be suspended without pay in full week blocks unless the reason for suspension is one of the exceptions to the “no-docking” rule discussed in the Code of Federal Regulations.

Paid Leave Time Reduction.  Neither the FLSA, nor Illinois law requires an employer to provide its employees with any paid leave time.  Accordingly, the U.S. Department of Labor has repeatedly held that an employer may reduce an employee’s paid leave time for any amount of time the employee has missed, whether one hour or several weeks.

What if an employer makes a mistake when disciplining an employee by docking his/her pay.  What should be done?

FLSA Safe Harbor.  The FLSA contains a safe harbor provision for an employer who improperly deducts an FLSA-exempt employee’s pay, so that the exemption will not be lost.  To qualify for the exemption, an employer must, first, clearly communicate a policy that prohibits the improper pay deductions.  According to the regulations, the best evidence of a clearly communicated policy is a written policy distributed to employees prior to the improper pay deductions.  Second, an employer must establish a “complaint mechanism” where employees can bring potential improper deductions to the employer’s attention.  Third, an employer must reimburse their employees for any improper deductions and make a good faith commitment to comply in the future.  Fourth and finally, an employer must refrain from willfully violating the policy by continuing to make improper deductions after receiving employee complaints.

Window of Correction.  The regulations contain a window of correction which protects employers who intend to pay their employees on a salary basis, but who, inadvertently and infrequently, dock an otherwise salaried employee.  If the employer reimburses their employees for improper deductions, employees will not lose their FLSA exempt status.

In summary, employers, including libraries, have a variety of means for dealing with absentee FLSA exempt employees, including suspension without pay, docking of paid leave time and docking of pay.  Moreover, even if the employer makes an improper deduction, they can utilize the FLSA’s safe harbor and window of correction provision.

Published December 12, 2007 in vol. 1, iss. 22 [View]