Beware of OT Rules if You Suspend a Salaried Employee

By Tanya Roth, Esq. on April 16, 2012 | Last updated on March 21, 2019

In-house counsel needs to be mindful of the consequences of employee discipline, particularly when it comes to unpaid suspensions.

While counsel doesn't always play the role of disciplining employees, it's very important to do a periodic review of Human Resource policies to make sure that legal concerns are adequately addressed.

So, what should you tell HR when it comes to unpaid suspensions?

For starters, HR needs to understand that the difference in the employee's status as exempt or non-exempt could have an important role in how the employee is disciplined.

If the employee is non-exempt, then HR can generally issue unpaid suspensions more liberally. But if the employee is exempt, then an unpaid suspension could have far reaching repercussions and may even result in an involuntary classification of the employee as non-exempt. Once status changes, you might start having issues of overtime pay.

Generally, an employer is within his rights to suspend an employee without pay, depending on the reason for the suspension. But employers may not make improper deductions from the salary of an exempt employee.

There are several other distinctions between exempt employees and non-exempt employees but we'll turn our discussion to unpaid suspensions.

The key rule is that an unpaid suspension must be imposed for serious workplace violations.

According to the FLSA, these violations are generally drug or alcohol use, prohibited sexual harassment or other violations of federal or state rules. But mere performance issues aren't sufficient for unpaid suspensions.

Your company's policy manual must have reasons for unpaid suspensions laid out, as well as policies and procedures governing employee discipline. If your policy manual does not have this, then perhaps it's time for a rewrite.

As in-house counsel, your job is to make sure the ship runs smoothly, at least with regards to the legal issues. It might be worth it to run a training on the issue of employee discipline for the HR professionals at your company.

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