Is Docking Pay for Poor Performance Okay?
It’s the same thing every day. You walk by Joe’s cubicle, and he is watching YouTube videos on his smartphone. He isn’t even rattled when you stop and ask him about a customer or an account. After giving you the information you asked for, he’ll sometimes get back to work. Other times he merely turns back to his video.
You’re thinking the interruptions will register with Joe as a gentle suggestion to get to work, but it’s not working. A conversation with him might be necessary. Remind him that when on the job he needs to perform his duties, not catch up on cute cat videos.
Withholding wages should send a clear message that he needs to stay on task, but you’re unsure if docking pay is even legal.
What is the best way to approach the situation with Joe? Docking pay is a sticky thing to navigate. It’s almost as sticky as the obstacle course on the new Double Dare episode you saw Joe watching last week!
Before you talk with Joe about his performance at work, it’s best to first understand the rules of docking pay. Once you’ve read the playbook, develop a strategy for how to approach Joe, and hopefully put an end to his screen time at work.
Fair Labor Standards Act
The aforementioned playbook, so to speak, is the Fair Labor Standards Act (FLSA). The act was initiated in response to public outrage after a slew of disasters within the labor force, which accounted for countless deaths due to abuse and neglectful actions on the part of employers.
According to the U.S. Department of Labor, “The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, record keeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments.”
The purpose of the FLSA is to ensure that all employees are protected and treated fairly by their employers. One aspect of this protection is guarding employees’ earned wages. So considering docking pay is not without some serious consequences, if done incorrectly.
Employees who are not subject to minimum wage and overtime laws are exempt employees. It is more difficult to dock the pay of an exempt employee, simply because they do not punch a time clock.
Exempt employees are paid a set salary for the time they are at work, regardless of the quality or completion of a task. There are, however, certain situations where it is legal to dock the pay of exempt employees. Docking pay in the following situations for exempt workers is permissible:
- A week in which operations ceased and the employee conducted no work
- An employee was absent for a day or longer, due to non-accident/sickness-related personal issues
- As a penalty for a safety violation of major significance
- Due to unpaid disciplinary suspensions of a full day or more, imposed in good faith for workplace conduct rule infractions
- To offset payment received for jury or witness duty
- In certain scenarios pertaining to FMLA
- A partial week worked upon beginning or terminating employment
Regarding employees who are absent due to accidents or sickness, based on the PTO plan in place for these types of situations, employers may also dock pay, if the bank of accruals for sickness and/or accidents has been exhausted.
Also, regarding any salary employees, docking pay can only be made in full-day increments. Therefore, if an employee works for even a portion of the day, then the employer must pay the employee for the full day.
Employees who subject to minimum wage and overtime are called non-exempt employees. Non-exempt employees should punch a time clock, use time-keeping software, or complete a time card.
These employees are paid an hourly rate, which cannot be less than the minimum wage established by either the federal government, state, or local jurisdiction (whichever is higher).
Non-exempt employees must be paid for the hours they work. Under no circumstances can an employer withhold payment for hours already worked.
Communication is vital when making a decision one way or the other. Kevin Welch, CEO of Journey Payroll, breaks down why this is so important. He explains, ” Communicate, communicate, communicate. If something is happening which would allow you to deduct pay, and you do, be ready for a wave of issues within your team culture. That person will say their side of the story to whomever they want – truth or not. Stay clear in your communication, and be decisive if someone is breaking those rules time and time again.”
So before you start docking pay, make sure you establish an open dialogue.
The takeaway of docking pay
There are three things an employer should know before docking pay: 1) the status of the employee (in other words, whether the employee is exempt or non-exempt), 2) the reason for docking pay, and 3) the federal, state, and local rules. After covering these bases, familiarize yourself with how you should go about docking pay. Being unclear with either of those pieces could put the employer in serious jeopardy where the FLSA or states are concerned.
Concerning Joe, since he has arrived at work, the best course of action is to have a conversation with him. Make note of company policies and expectations with regard to the use of technology during the workday. Remind Joe that you, too, enjoy the reemergence of Double Dare episodes, but he should keep his video viewing to breaks only.
Once Joe clearly understands the policies and expectations, let him know that further refusal to comply with policy could result in a reduced hourly wage. Remember to keep him at or above minimum wage, or Joe won’t be the only person getting in trouble.
As with any other topics in the HR realm, please contact an HR Professional or employment attorney before taking any actions!