DOL Publishes “Safe Harbor” Policy

Prior to issuance of the new overtime regulations, salary deductions often led to “class action” claims where otherwise exempt employees claimed to have been converted to non-exempt workers arguing that the “deductions” meant they were not paid on a “salaried basis.”  The new DOL regulations provide businesses the ability to limit such class actions if a new “safe harbor” is adopted. 

Even under the new overtime rules, it continues to be improper for an employer to make “partial day” deductions from a salaried exempt employee’s wages because they are late reporting to work, miss work to attend a parent/teacher conference, or leave early when a facility closes due to inclement weather, among other reasons.  Employers may, however, make deductions from an employee’s salary due to absences of a “full work” day or more occasioned by illness, vacation or personal reasons.   

The new overtime regulations make it clear that isolated or inadvertent deduction which is improper will not result in the loss of exempt status provided the employer reimburses the employee upon receiving notice of the improper deduction.  For this protection to apply, employers must publish a policy advising employees of the prohibition against improper deductions and an easy-to-use complaint procedure.  Gentry Locke has developed a sample policy that is available upon request.   

On September 20, 2004, the DOL published a sample policy entitled “Sample Salary Basis Policy.“  If you would like a copy of Gentry Locke’s sample policy, contact the Gentry Locke attorney with whom your regularly work, or W. David Paxton  or Todd A. Leeson.