Can I Reduce an Employee's Pay for Mistakes? - IE3: Indoor Environment & Energy Efficiency

Can I Reduce an Employee’s Pay for Mistakes?

Question: Help! I have an employee who continually makes mistakes on the job and it is adding up and costing me money! Can I legally dock his pay?

Answer: The Fair Labor Standards Act does not appear to prohibit reducing an employee’s hourly wage for mistakes made on the job, provided the employee is still receiving the minimum wage required by law.

There may be other concerns under this scenario, however. If an employer chooses to dock pay for an employee’s mistakes, the employer should have a written policy concerning this issue, ensure that the employee is aware of the policy, clarify in the policy the types of “mistakes” that will result in pay diminution, and enforce the policy in an even-handed fashion. For example, if in practice only employees of a certain national origin, gender, or age, suffer wage deductions under this policy, the employer’s policy could be challenged under federal anti-discrimination laws as having an adverse impact on employees in a protected category. The employer’s ability to recruit and retain qualified employees may also be impacted by such a policy – all the more reason to ensure that it is properly drafted and communicated to employees at the time of hire and memorialized in an employee handbook.

DISCLAIMER
This response is intended for general informational purposes only and should not be construed as legal advice or a legal opinion, nor is this column a substitute for formal legal assistance. For help with particular legal needs, members are invited to consult with ACCA’s LegalTools Counsel, Brooke Duncan III of Adams and Reese LLP. Mr. Duncan can be reached at 504-585-0220 or by email at brooke.duncan@arlaw.com.

Hilary Atkins

Hilary Atkins

Hilary Atkins is ACCA General Counsel & Senior Vice President for Finance & Administration.
Hilary Atkins

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