Federal and state wage and hour laws will determine when employee suspensions must be paid, with the key component being the Fair Labor Standards Act (FLSA) classification of the position as exempt or nonexempt. Collective bargaining agreements as well as employer policy and practice may also guide an employer that wishes to suspend an employee without pay.
Under the federal FLSA, major differences exist between the exempt and nonexempt classifications when it comes to an employer's ability to implement unpaid suspensions.
The FLSA generally requires nonexempt employees to be paid only for time actually worked and places no restrictions on an employer's ability to schedule or not schedule an employee for work. One exception to that rule might be found in salaried nonexempt employees. The DOL's Field Operations Handbook, §32b04b(b), states that salaried nonexempt employees must be paid their full salary, "regardless how few the scheduled hours may be in a particular week, even though occasional disciplinary deductions for willful absence or tardiness are made. Disciplinary deductions, of course, may not cut into the minimum wage or overtime pay required by the act." Given this regulation, it is advised that before suspending a salaried nonexempt employee without pay, an employer consult with its attorney for an interpretation of how the regulation applies to the specific scenario.
For exempt employees, the FLSA requires those exemptions subject to the salary basis regulation 541.602 to be paid their weekly salary, with few exceptions. In terms of unpaid suspensions, the regulation states that an employer may dock an exempt employee's pay under the following conditions:
An employer may impose in good faith an unpaid suspension for infractions of workplace conduct rules, such as rules prohibiting sexual harassment, workplace violence or drug or alcohol use or for violations of state or Federal laws. This provision refers to serious misconduct, not performance or attendance issues. The suspension must be imposed pursuant to a written policy applicable to all employees.
Deductions from the pay of an exempt employee may be made for suspensions of one or more full days imposed in good faith for disciplinary reasons for infractions of workplace conduct rules. Such disciplinary deductions may only be made in full day increments.
Although many state laws will follow the federal law on the issue of unpaid suspensions, employers need to review each state in which they have employees to determine compliance.
Finally, the employer must review collective bargaining agreements for any further restrictions and must carry out company policies on unpaid suspensions consistently to avoid any unlawful discrimination issues.
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