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.
Reducing pay and commission is punitive and can clearly inhibit the message of changing behavior. Try using a method that shows what behavior is expected by the company and reward and model the desired results. Reducing pay can alienate the employee and potentially create retention issues that may be difficult to overcome. All rights reserved.