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Department of Labor Revises Its Wage and Hour Regulations
As Connecticut employers well know, they have been operating under archaic and what many feel to be unreasonable wage and hour laws. Particularly difficult to administer have been the rules addressing exempt employees. Most commonly the questions arise in the context of whether an employee falls within the wage and hour laws’ definition of exempt, and under what circumstances an exempt employee’s salary may be reduced.
Effective July 25, 2001, the rules have been revised, with mixed results for employers. On the one hand, employers must now meet a higher salary threshhold test prior to being able to legally classify an employee as exempt. On the other hand, Connecticut employers may now dock an exempt employee’s pay under a broader range of circumstances.
Salary Threshold
Prior to the effective date of the new regulations, a white collar employee (i.e., one employed in an executive, administrative or professional capacity) was required to be paid at least one hundred twenty-five dollars per week in order to be eligible for an exemption. To be eligible for exemption under the shorter test, employees must have earned at least one hundred seventy-five dollars. Under the new regulations, these thresholds have been increased to four
hundred and four hundred and seventy-five dollars respectively. Thus, as a general rule, employees must be paid a salary of at least $20,800 in order to be eligible for an exemption under Connecticut wage and hour laws.
hundred and four hundred and seventy-five dollars respectively. Thus, as a general rule, employees must be paid a salary of at least $20,800 in order to be eligible for an exemption under Connecticut wage and hour laws.
Salary Basis
Only employees paid on a salary basis are eligible for an overtime exemption. Salary basis means a predetermined amount paid for each pay period, regardless of the number of days or hours worked and which is not generally subject to reduction. Employees need not be paid for any workweek in which they perform no work. Prior to implementation of the new regulations, deductions to a salary could be made only under the following circumstances: (1) the first and last week of work could be prorated to reflect those days actually worked, and (2) employees could be paid only for time actually worked in a week in which they are absent from work due to a Family and Medical Leave Act qualifying event.
Changes to the Docking Provisions
Connecticut employers may now deduct from an exempt employee’s salary in five circumstances. In addition to the two circumstances mentioned above, employers may deduct for (1) one or more full days if the employee is absent for personal reasons other than sickness or accident; (2) one or more full days of sickness or disability provided the deduction is made pursuant to a bona fide plan, policy or practice of making deductions from an employee’s salary after sickness or disability leave has been exhausted: and (3) one or more full days if the employee is absent as a result of a disciplinary suspension for violating a safety rule of major significance.
A Cautionary Note
Employers should be careful not to deduct for absences that do not fall within the five noted exceptions. In particular, no deductions can be made for absences of less than a full day unless it is a Family and Medical Leave Act qualifying absence, or it is taken pursuant to a bona fide paid time off benefits plan that specifically authorizes the substitution or reduction from accrued benefits for the time that an employee is absent from work, provided the employee receives payment in an amount equal to his guaranteed salary. Moreover, no deductions may be made for any part of a workweek absence that is attributable to (1) lack of work occasioned by the operating requirements of the employer; (2) jury or witness duty; or (3) temporary military leave. Employers should also note that deductions for disciplinary suspensions are only allowed if the suspension is the result of violating a major safety rule. Safety rules of major significance include only those relating to the prevention of serious danger to the employer’s premises, or to other employees. No deductions can be made for an absence of less than one week resulting from a disciplinary suspension for violating ordinary rules of employee conduct.