Effect of Improper Deductions
{"Image DocumentName": "Effect of Improper Deductions", "Image ImageDescription": "The FLSA at the University of Michigan. January Effect of Improper Deductions. An actual practice of making improper deductions from salary will result in the loss of the exemption: During the time period in which improper deductions were made. For employees in the same job classifications. Working for the same managers responsible for the actual improper deductions. Isolated or inadvertent improper deductions, however, will not result in the loss of exempt status if the employer reimburses the employee. What is the effect on an employee\u2019s exemption status if an employer makes improper deductions from the salary? If the employer had an actual practice of making improper deductions from salary, the exemption will be lost, and overtime pay due for hours worked over 40 per week during the time period in which improper deductions were made, to employees in the same job classifications and who work for the same managers responsible for the actual improper deductions. Employees in different job classifications, or working for different managers, would not lose their exempt status. Isolated or inadvertent improper deductions, however, will not result in the loss of exempt status if the employer reimburses the employee for the improper deduction. A key term here is actual practice. Factors considered when determining an actual practice include, but are not limited to: the number of improper deductions; the time period during which the employer made improper deductions; the number and geographic location of both the employees whose salaries were improperly reduced and the managers responsible for making the improper deductions; and whether the employer has a clearly communicated policy permitting or prohibiting improper deductions. The regulations provide a safe harbor for employers who have a clearly communicated policy prohibiting improper deductions. If an employer (1) has such a clearly communicated policy which prohibits improper deductions and includes a complaint mechanism, (2) reimburses employees for any improper deductions, and (3) makes a good faith commitment to comply in the future, then the employer will not lose the exemption for any employees unless the employer willfully violates the policy by continuing to make improper deductions after receiving employee complaints. The best evidence of a clearly communicated policy is a written one distributed to employees before the improper pay deductions occur, for example, by providing a copy of the policy to employees when they are hired, publishing it in an employee handbook or distributing it to employees over the employer\u2019s Intranet. \u00a9Copyright 2004 The Regents of the University of Michigan.", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}