In Focus Wage and Hour Laws

January 1, 1995 Advisory

In this new practical advice feature, we will endeavor to highlight a particular area of employment or benefits law. Using a question and answer format, we hope to share some insights about commonly asked questions or little known legal requirements in an effort to help our clients fully comply with the ever growing web of employment laws and regulations.

Q Can I make deductions from the salary of an exempt employee for lateness or for disciplinary reasons?
A Generally, no. To qualify for one of the white collar overtime pay exemptions, an employee must be paid on a salary basis, which means that the employee receives the same amount of money regardless of how many hours are actually worked each week. However, the U.S. Department of Labor takes the view that salary can be docked in full day increments for absences, while the Connecticut Department of Labor takes the narrower view that only full week absences permit the employer to deduct from an employee's pay. Both agencies, however, permit an employer to make appropriate adjustments to salary to compensate an employee who takes a covered intermittent or reduces schedule leave under their respective Family Medical Leave Acts. Under federal law, salary also can be withheld as a disciplinary measure but only if the employee has violated a major safety rule causing danger to the plant or other employees. Other disciplinary deductions are not permitted. If an employer makes improper deductions from an exempt employee's salary, the employer risks losing the overtime exemption not only for the employee in question, but for every employee in that job classification.

Q Can I pay employees as infrequently as once a month?
A Under Connecticut law, wages must be paid in cash or by check on a regular weekly pay day. If an employer wishes to establish pay days less frequently than weekly, it can only do so by filing an application with and obtaining approval from the Connecticut Department of Labor. The Department will generally not approve applications to pay employees less frequently than once a month. Direct deposit arrangements are permissible, but only with the written permission of the employee. Under any arrangement, wages must be paid within eight days of the end of the pay period, whether the pay period is weekly, bi-weekly, semi-monthly or monthly.

Q Can I give non-exempt employees compensatory time off ("comp-time") instead of overtime pay?
A Not in Connecticut. Many employers do not realize that wage and hour laws do not recognize the concept of comp time in the private sector. The law provides that employees be paid at time and one half of their regular hourly rate for hours worked in excess of 40 per week. No alternative method is contemplated. However, the U.S. Department of Labor has taken the position in various Administrative Opinion letters that it will not pursue employers who offer the comp time alternative as long as the comp time is given at a time and one half rate and is taken by the employee in the same pay period. The Connecticut view is more narrow. When employees work more than their scheduled hours, a Connecticut employer is permitted only to give the employee time off in the same week on an hour for hour basis. This is not so much "comp time" as it is a device to prevent the employee from exceeding a 40 hour week, thereby avoiding the overtime issue altogether.