Monthly Archives: February 2015

February 23, 2015

Exempt Employee Salary Deductions for a Reduced Schedule

Brad CaveBy Brad Cave

Classifying an employee as exempt under the Fair Labor Standards Act (FLSA) comes with a trade-off.  Most employers know that exempt employees are not entitled to overtime.  But, in exchange for that benefit, the FLSA limits employers’ ability to reduce the exempt employee’s salary, even when they are not coming to work.  However, exempt employees are not immune from needing time off of work to recover from a medical condition, to settle an aging parent into an assisting living arrangement or to handle a long-term behavioral issue with a child. If an employee seeks some time off each week to take care of such matters, you may agree to allow the employee to work a reduced work schedule for a period of time. But when payday rolls around, must you pay the employee his or her full weekly salary or can you deduct pay to reflect the reduced work schedule? Missing this answer can have significant ramifications for the employee’s exempt status.

FLSA Salary Basis

Under the Fair Labor Standards Act, exempt employees’ pay must meet the salary basis test, which means that the employee must receive a predetermined amount of salary for each workweek, without reductions because of variations in the quality or quantity of work during the week. Thus, deductions from salary for reduced working hours is generally not permitted under the salary basis test. Deducting pay for the missed time could result in the loss of the employee’s exempt status. However, two exceptions may apply to your employee.

FMLA Leave Can Result in Pay Deduction

If the employee’s reduced schedule constitutes unpaid leave under the Family and Medical Leave Act (FMLA), the FLSA regulations permit employers to “pay a proportionate part of the full salary for time actually worked” without risk to the exempt status. This means that if your employee is missing work for an FMLA-qualifying reason, you may deduct pay from their weekly salary to reflect the unpaid FMLA leave time.

PTO, Sick Leave or Other Paid Leaves

If the employee has accrued PTO, sick leave or another type of company-provided paid leave, you can require that the employee use such paid leave to cover the partial day absences, as long as the employee continues to receive the full amount of their weekly salary. And, once the employee uses up all of their accrued paid leave, you can make salary deductions for full-day, but not partial-day, absences.

Saved Wages Vs. Loss of Exempt Status

Deductions from an exempt employee’s salary should be made only after careful consideration of the potential consequences. After all, the salary you save now for missed time may seem trivial if you lose the exempt status of this and all similarly-situated employees and owe them overtime for the past two years.

February 16, 2015

Lessons From a $15M Discrimination Verdict

Mark Wiletsky of Holland & HartBy Mark Wiletsky 

A Colorado federal jury reportedly awarded $15 million last week to 11 workers who claimed they had been subject to workplace harassment, discrimination and retaliation because of their race and national origin. Ten of the 11 current and former workers who sued their employer, a trucking and mail-sorting company at Denver International Airport, were black men. Three had been born in the United States and the remaining seven were from Mali, Guinea and Brazil. Their allegations included that racist comments pervaded the workplace, that they were discriminated in work assignments, layoffs and pay and were segregated into certain unfavorable job categories and shifts, and that they faced retaliation after complaining about the harassment and discrimination. 

Although we do not know exactly which facts or claims persuaded the jury to award this large sum, the fact that the jury awarded $13 million dollars for punitive damages suggests that it believed the company’s actions (or inactions) were particularly bad. 

What can you learn from this significant discrimination verdict? Even if the verdict is later reversed or reduced, you can learn what not to do when managing a racially and ethnically diverse workforce. 

Ignoring Complaints and Promoting the Harassers 

The workers in this case alleged that they complained internally about racist comments and slurs made by supervisors, leads and co-workers and that nothing was done. Examples of some supposed comments directed toward the workers were “lazy, stupid Africans,” “go back to your f***ing country,” “they need to fire all the n***ers here” as well as regular use of the N-word. Instead of stopping the comments, management supposedly turned a deaf ear and even promoted some of those who made the slurs. 

Don’t ignore inappropriate comments when you hear them. It is up to you to stop racial and ethnic slurs immediately and take action to ensure they are not pervasive in your workplace. If an employee complains about discriminatory name-calling and threats, you need to investigate the report and take appropriate action. Be sure to confirm—in writing—that you met with the accuser(s) to discuss the results of your investigation, and ensure there is no retaliation. Then follow-up again to ensure things have improved. Doing so will demonstrate your commitment to a workplace free from discrimination and harassment – so long as you are prepared to take action against those who violate your policies. 

Failing to Enforce EEO and Harassment Policies 

You likely have an Equal Employment Opportunity and a Harassment policy in your employee handbook, but they do no good if you fail to enforce them. Review your policies, train your supervisors on them and enforce them uniformly and consistently. 

Retaliating Against Those Who Complain or Their Supporters 

The eleventh worker who sued the trucking company in this case was a white man who offered support for the African workers and provided evidence supporting their allegations. After being terminated from his job, he alleged his firing was in retaliation for his support. 

Retaliation is within company control and in many cases, is preventable. Train your supervisors not to treat an employee who has complained of discrimination or harassment, or who has participated in a charge or lawsuit, differently than other employees are treated. Carefully analyze any adverse decision that would affect such an employee and make sure your decision is based on legitimate business reasons and is well-documented, in case you have to defend a retaliation complaint. 

Fifteen Million Reasons To Do It Right 

You don’t want to end up in front of a jury defending your employment practices, but if you find yourself in that position, you want to be able to show a jury you did everything you could to prevent discrimination and harassment in your workplace. If you don’t take those actions, a jury may very well punish you for it.