When to Dock an Exempt Employee's SalaryEmployers may pay executive, administrative, and professional employees who are exempt from the Fair Labor Standards Act (FLSA’s) minimum wage and overtime requirements on a salary basis. The salary of exempt employees must meet a predetermined amount of pay no less than $576.93 per week each pay period (in Maine). The new Maine minimum salary requirement is $576.93 per week as of January 1, 2018. Salary is only one factor in determining whether a worker is exempt from overtime under federal or state law. More about Maine Minimum Wage.

Salaried exempt employees are not paid according to hours worked and typically must receive their full salary for weeks in which they do any work. They do not, however, have to be paid for days/weeks in which they perform no work. Employers are allowed to dock salary only in limited cases.

Permissible Exempt Salary Deductions

The following are permissible deductions:

  • Absences of one full day or more for personal reasons, except sickness or disability. If applicable, you can deduct time taken for personal reasons from the employee’s available leave balance instead of docking his or her salary.
  • Absences of one full day or more for sickness or disability, if your company has a policy covering these types of leave and the employee has exhausted his or her available time or isn’t eligible for the leave.
  • Days not worked during the first and last week of employment. For instance, an employee who works three full days during his or her first week is due only three days’ pay for that week.
  • Penalties imposed for violating the company’s major safety rules.
  • Unpaid suspension of one or more full days for breaching workplace conduct rules.
  • Unpaid leave taken in accordance with the Family Medical Leave Act (FMLA).

Except for days not worked during the first and last week of employment and unpaid leave taken under the FMLA, deductions must be taken in full-day increments and not for partial days. For instance, if an employee takes two and a half days off for personal reasons, deduct only two days’ pay.

Improper Exempt Salary Deductions

An employer cannot dock an exempt employee’s salary because the quality or quantity of his or her work has changed. If the employee shows up and is willing and able to work, he or she must typically receive his or her full salary, even if no work is available.

In addition, deductions may be made for the following:

  • Business closings because of inclement weather
  • Jury duty
  • Serving as a witness
  • Temporary military leave
  • Absences caused by the employer or the operating requirements of the business

If you unintentionally make an improper deduction, you will not lose the exemption if after receiving the employee’s complaint you:

  • Reimburse the employee for the improper deduction
  • Make a good faith commitment to abide by the FLSA in the future

Employers with a habit of taking improper deductions from salary will lose the exemption. In this case, the employee will be nonexempt and eligible for minimum wage and overtime.

To ensure that you understand the difference between permissible and improper deductions, our HR on Demand service provides real-time support from Certified HR professionals.