Docking employees’ pay without affecting their exempt status

Docking a salaried, exempt employee’s pay may raise questions about whether the employer is indeed paying the employee on a salary basis as opposed to paying them based on the quantity or quality of work performed. So, if you are going to dock a salaried, exempt employee’s pay—because of absences or for disciplinary or performance reasons—you need to be sure you do so in a way that doesn’t affect their exempt status.

Seven principles for docking pay based on absences

Under federal law, the following general rules apply to docking the pay of exempt employees for absences, but you should also confirm with counsel that no state laws deviate from the following principles:

Number 1. The employer may dock the pay of an exempt employee for any workweek in which the exempt employee performs no work.

Number 2. During the first week and last week of employment, the employer may prorate the exempt employee’s pay.

Number 3. If an exempt employee takes a full-day absence for personal reasons (not sickness or disability), the salary may be docked for that full day.