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October 07, 2010
General Information About Payroll Deductions and Risks of Improper Deductions

Cheryl Orr and Heather Sager discuss payroll deductions and risks of improper deductions in a BLR webinar entitled ‘Wage Payments: What You Can and Can’t Legally Deduct from Employees’ Pay’. They provide the following general information about payroll deductions.

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Non-exempt employees are paid for the time that the employees are actually working. Exempt employees are paid in full for any week in which these employees perform some work subject to some exceptions. It is important to make this distinction regarding payroll deductions because an improper payroll deduction can lead to a challenge or loss of the exempt status of workers.

  • Hourly Employees: Paid only for time worked
  • Exempt Employees: Paid full salary for any week in which they perform any work!. This is subject to exceptions.

Risks of improper deduction include the following:

  • The biggest risk is that an exempt employee might lose the exemption.
  • Class action lawsuits
  • Civil penalties for repeat or willful violations
  • ‘Window of Correction’. The Window of Correction allows employers the opportunity to correct incorrect employee classification

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, and 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.

Heather M. Sager, Esq. is also a partner in the Labor and Employment Practice Group at Drinker Biddle & Reath LLP. Sager focuses her practice on management-side representation in collective and class actions, with particular experience in wage and hour litigation under state and federal law, including representative claims brought under California Business & Professions Code Section 17200.

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