Introduction to pay deductions covered by the Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act (FLSA) establishes, among other things, federal standards for minimum wages and overtime pay that employers are required to follow.
Unless a specific minimum wage and overtime exemption applies, employees must be paid at least the applicable minimum wage for each hour worked and overtime for any hours in excess of 40 hours worked in the workweek.

Employees who do not qualify for an exemption are commonly referred to as "nonexempt employees" and those employees who do qualify are referred to as "exempt employees."

Risks

The issue of improper deductions applies to all employees, both nonexempt and exempt. An improper deduction from either is a violation of the FLSA law and such violations can result in investigations by the United States Department of Labor (DOL) and/or expensive and time-consuming litigation.
As an employer considering taking deductions from any employee's wages, you should be careful to ensure that taking the deduction will not violate the FLSA law.

Conclusion

It is essential that employers exercise care when making deductions from employee pay. For nonexempt employees, deductions may never cause the employee to earn less than the minimum wage and may never cut into pay for overtime hours. For exempt employees, unless a deduction is specifically listed in the CFR, making such a deduction will likely result in a violation of the FLSA and could result in loss of the minimum wage and overtime exemptions. With so much at risk, you should not hesitate to contact employment counsel in making deduction decisions.

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Modern Business Associates frequently deals with payrol issues. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kinds of topics including the FLSA law.