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May 06, 2010
When Can You Deduct From Exempt Employees' Pay?

In a BLR webinar entitled "Exemption Audits: Prepare Now for Stepped-Up Department of Labor (DOL) Enforcement--Who's Entitled to Overtime and Who's Not," Cheryl D. Orr, Esq. partner and co-chair of the national Labor and Employment Practice Group at Drinker Biddle & Reath LLP recommended areas for focus when considering whether to deduct from exempt employees' pay. Law varies from state-to-state and may also depend on company policy, so when conducting an exemption audit it is important to consider the following scenarios closely:

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  • Partial day absences
  • Furloughs
  • Reduced work schedules
  • Late arrival or early departure
  • Sickness
  • Workers compensation
  • Jury duty or witness leave
  • Military leave

Conversely, if an exempt employee is paid extra for "extra work" or as a bonus, it must be carefully characterized to avoid the perception of overtime pay.

Cheryl D. Orr, Esq. is a partner and co-chair of the national Labor and Employment Practice Group at Drinker Biddle & Reath LLP. She concentrates her practice on defending employers against FLSA collective actions and state and federal wage and hour class actions. She regularly litigates discrimination, harassment, and unfair competition claims, conducts high-level workplace investigations, develops plans for reductions in force and offers employer advice and counseling.

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