Conditions under which Deductions from the Pay of Exempt Employees May Be Made (IV.5.7)

POLICY IV.5.7
Volume IV: Human Resources
Chapter 5:  Compensation
Responsible Executive: Senior Vice President for Business Services and Assistant Treasurer
Responsible Office: Human Resources Services
Date Issued: August 23, 2004
Date Last Revised: September 25, 2009

TABLE OF CONTENTS

Statement of Policy
Reason for This Policy
Individuals and Entities Affected by This Policy
Who Should Know This Policy
Exclusions
Web Site Address for This Policy
Contacts
Definitions
Responsibilities
Procedures
Related Documents, Forms, and Tools
History and Updates
Appendices                                                                

STATEMENT OF POLICY

It is the intention of Purdue University to comply with the salary basis requirements of the Fair Labor Standards Act (FLSA), revised effective August 23, 2004, as they apply to public sector organizations. The act prohibits improper deductions from the salaries of Exempt employees.

REASON FOR THIS POLICY

The Fair Labor Standards Act allows employers to Dock Pay of Exempt staff for certain prescribed reasons. As part of the provision, the employer must have a written policy in place describing the conditions under which pay may be docked.

INDIVIDUALS AND ENTITIES AFFECTED BY THIS POLICY

• Exempt employees
  

WHO SHOULD KNOW THIS POLICY

• President
• Provost
• Associate and Vice Provosts
• Chancellors
• Executive Vice President and Treasurer
• Vice Presidents
• Deans
• Directors/Department Heads/Chairs
• Principal Investigators
• Faculty
• Business Office Staff
• Exempt Administrative and Professional Staff

EXCLUSIONS

This policy does not apply to non-exempt employees.

WEB SITE ADDRESS FOR THIS POLICY

http://www.purdue.edu/policies/pages/human_resources/iv_5_7.html

CONTACTS

DEFINITIONS

Dock Pay
Reduce, pay less than, or withhold part of an employee’s pay.

Exempt
Employees who are not subject to the overtime and recordkeeping provisions of the Fair Labor Standards Act.

RESPONSIBILITIES

Compensation
Communicate this policy to Exempt employees. 

Supervisor
Provide policy to Exempt employees; contact Employment and Compensation prior to Docking Pay; inform employee if pay is to be docked.

Business Office
Prepare Leave Action form paperwork.

Payroll
Utilize appropriate procedures to Dock Pay of the affected employee.

PROCEDURES

In order to ensure compliance with the FLSA, any department contemplating Docking Pay of an Exempt employee must contact Compensation before proceeding.

An Exempt employee’s pay may be docked by executing a Leave Action form showing the amount of pay to be docked and the dates for which the employee is to be in unpaid status.

Deductions from pay must relate to time not worked. Employers may not make deductions and expect employees to work without compensation.

Deductions may be made when an Exempt employee is absent from work for one day or more when the accrued leave provided by the University (see Executive Memorandums C-45 and C-46) is not used by an employee because:

• accrued leave has been exhausted;
• the employee chooses to use leave without pay; or
• permission for leave has not been sought or has been denied. (May be accompanied by disciplinary action.)

Deductions from the pay of Exempt employees may be made for:

• suspensions given for violations of safety rules of major significance, which include those relating to the prevention of serious danger in the workplace or to other employees or
• suspensions given for violations of written Purdue policy or written workplace conduct rules applicable to all employees within the workplace.

During the initial and terminal pay periods of employment, Purdue will pay the proportionate amount of an employee’s full monthly salary based on the number of days the employee actually worked in these periods.

For Exempt employees taking unpaid leave under the Family and Medical Leave Act (FMLA), the annual rate of pay is used to calculate an hourly rate. Pay is deducted based on the number of hours in unpaid status.

For example, if an employee who normally works 40 hours per week uses two hours of unpaid leave under the FMLA, Purdue deducts two hours worth of pay from the monthly salary.

If an employee believes that an improper deduction has been made from his or her monthly salary, the employee should report this to Compensation. Reports of improper deductions will be promptly investigated. If it is determined that an improper deduction has occurred, the employee will be promptly reimbursed.

RELATED DOCUMENTS, FORMS, AND TOOLS

• Leave of Absence Policies for Clerical and Service Staff (C-45)
• Leave of Absence Policies for Faculty, Continuing Lecturers, and Administrative and Professional Staff (C-46)
• Leave Action form

HISTORY AND UPDATES

This policy was originally issued on August 23, 2004, in response to changes in the Fair Labor Standards Act.

September 25, 2009: updated to reflect terminology and process changes resulting from the implementation of OnePurdue.

APPENDICES
There are no appendices to this policy.