The first consideration should be the presence of a union agreement. Most union agreements specify a defined procedure to respond to disciplinary situations. Utilizing an arbitrary punitive process such as reducing pay can be a violation of the union agreement. Typically, the only exception would be in the case of safety violations, which are treated very harshly by many union contracts. The FLSA also applies to all public agencies, most hospitals and other healthcare entities, and schools.
Employees are exempt under the FLSA if they are paid on a salary basis.
Employees are considered to be paid on a salary basis within the meaning of the Act if under their employment agreements they regularly receive in each pay period a predetermined amount that is not subject to reduction because of variations in the quality or quantity of the work they perform. Therefore, the effect of subjecting an exempt employee's pay to deductions for disciplinary reasons is that the exemption is inapplicable to that employee during the entire period when such deductions were made. Such deductions are antithetical to the concept of a salaried employee, because a salaried employee is compensated not for the amount of time spent on the job, but rather for the general value of services performed. Lastly, consideration should be given to the objective of the disciplinary process. Most employers choose to use progressive discipline as an attempt to coach performance.