Fair Labor Standards Act's "White Collar" Exemptions: The Unexpected Danger of Disciplinary Suspensions and Other Personnel Policies

Daniel T. Campbell
Stuart M. Silberman

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DOI: 10.2190/QWFH-3K3D-9L18-RQT8

Abstract

Employers regularly classify many of their highest paid executive, professional, and administrative employees as "salaried." As such, these employees receive a fixed amount of compensation and are not entitled to overtime wages in accordance with the FLSA. However, despite their exempt classification, these employees can become entitled to overtime pay if the employer utilizes certain personnel policies which have been held by the courts to be inconsistent with "salaried" status. The most common personnel policies which may entitle otherwise-exempt employees to overtime pay are: 1) unpaid disciplinary suspensions; 2) salary deductions for part-day absences; 3) accrued benefit deductions for part day absences; 4) overtime pay for additional hours worked; and 5) salary deductions for jury duty/testifying as a witness. These personnel policies which inadvertently entitle exempt employees to overtime pay can expose the employer to potentially enormous back-pay liability.

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