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Salary Reduction (Virginia)

Does Virginia have any specific guidelines when it comes to reducing the salary permanently for an exempt employee based on poor attendance? If there is noticeable improvement, instead of increasing base pay, award employee with some sort of performance bonus?

The concern here is not Virginia law, it is federal law. Virginia has no overtime law. Instead, employees are exempt from overtime under the federal FLSA or Fair Labor Standards Act.

The tactics you propose probably would not stand up in court. When you pay an exempt employee more during weeks when the employee works more, then you are endangering the exempt status. Federal law requires that to be exempt, an employee must be paid the same amount every week *without regard to the quantity or quality of work*. When you start adjusting the employees earnings weekly, it certainly appears that the company is conspiring to avoid the federal overtime law. Calling the extra payment a *bonus* does not change that.

If you implemented this tactic, and the employee challenged it (or reported it to the US Department of Labor) it is likely that the courts would find that this employee never was exempt. You would be liable for back wages for overtime for the past 3 years, plus penalties, fines and court costs.

An employer can require that an exempt employee work a specific number of hours per week. When the employee works fewer hours, he or she can be disciplined or terminated for poor performance — but the employee must still be paid his or her full salary for the week. 

If the employee is taking time off due to a disability under ADA, he or she may be entitled to unpaid time off as a reasonable accommodation. Or, the exempt employee may be entitled to unpaid time off under FMLA, the federal Family and Medical Leave Act. Under some circumstances, when an employee misses an entire day of work due to illenss or personal business, the exempt employee need not be paid for that day. But if none of these situations are involved, we suggest that you address this as a performance problem, and use disciplinary actions other than salary reduction to combat the problem.


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This entry was posted on Friday, July 31st, 2009 at 2:08 pm and is filed under
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One Response to “Salary Reduction (Virginia)”

  1. » Salary Reduction (Virginia) Human Resource Blog - Himanchals Org. Says:

    [...] likely that the courts would find that this employee never was … See the original post:  » Salary Reduction (Virginia) Human Resource Blog :and-ensuring, and-the, calling-the-extra, employee, employee-challenged, extra, [...]

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