Can an employer dock an employee’s pay to cover for damage to company property or other losses caused by the employee’s negligence or misconduct? A recent federal trial court ruling addressing the issue illustrates that while the answer is not necessarily no, there are potential risks involved that should be carefully considered before the employer acts.
In Swope-Kreiser v. Blitchton Marathon Inc., the federal district court for the Middle District of Florida applied the general rule under the Fair Labor Standards Act (FLSA) that an employer could not deduct money from a non-exempt employee’s pay to cover for cash register shortages and missing inventory where doing so dropped the employee’s overall pay to below the minimum wage. The court not only ordered the employer to pay back all the deductions taken, but also assessed double damages.
It gets even more precarious for an employer that wants to dock the pay of an exempt employee to cover for losses, because the FLSA requires an employer to pay an exempt employee a minimum weekly salary. The Labor Department (DOL), which enforces the FLSA, takes the position that any deductions from an exempt employee’s salary for loss or damage would defeat the exemption, thus creating a whole slew of additional issues.
Last but not least, many states have their own rules regarding deductions from pay for loss and damages, further complicating compliance in some jurisdictions.
Members of the Center for Workplace Compliance (CWC) can read more here.