Q. I own a construction company. We require all employees to wear a company shirt. If an employee does not wear a company shirt, he or she is assessed a $25 per day penalty, which is deducted from the next paycheck. Is this penalty legal?
A. It depends. While disciplinary deductions from pay are allowed under federal wage-and-hour laws, Ohio’s wage payment statute (Ohio Rev. Code sec. 4113.15) permits deductions from an employee’s wages only for certain specific purposes:
- The purchase of U.S. savings bonds or corporate stocks or bonds
- A charitable contribution
- Deposits to a credit union savings or other regular savings program
- Repayment of a loan or other obligation
- Other deductions authorized by the employee.
In this case, it is unclear whether the employee authorized the deduction. At a minimum, I would want to see a signed, written authorization in which the employee certifies that he or she is aware of the penalty and agrees to pay the employer a penalty in the amount of $25 for every day the company shirt is not worn. Otherwise, you risk violating section 4113.15.
What if the employee who doesn't wear the shirt is exempt?
Q. Does the answer change at all if the employee being penalized is exempt instead of nonexempt?
A. Yes. For the key exemptions under the Fair Labor Standards Act (executive, administrative and professional), employees must be paid on a salary basis to qualify. Docking ’ pay could jeopardize their exempt status because it treats them as something other than salaried.
An employee is paid on a “salary basis” if the employee on at least a weekly basis receives a predetermined amount that is not subject to reduction because of variations in the quality or quantity of the work performed. An must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked.
Employers may make deductions from exempt employees’ salaries for penalties imposed because of infractions of major safety rules that relate to the prevention of serious danger in the workplace (rules prohibiting smoking in oil refineries, for example).
Wearing a shirt bearing the company logo will not fall under this category.
You don’t want to put an employee’s exempt status in jeopardy under any circumstances, for fear of owing back overtime for any hours worked in excess of 40 for all workweeks for up to two, or even three, years. Such a mistake could prove very costly.
Thus, applying this policy to salaried exempt employees would pose a high risk.
OK, that's going to be a problem
Q. Well, my worst offender happens to be my construction foreman. I need him to set an example for the rest of my employees, and want to be able to make an example out of him if he continues to ignore my rule. Is he exempt or nonexempt?
A. The foreman could qualify for either the executive or administrative exemption depending on the circumstances.
The executive exemption would apply if:
- The employee’s primary duty consists of managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise
- The employee customarily and regularly directs the work of at least two or more other full-time employees
- And has the authority to hire or fire other employees.
The administrative exemption would apply if the employee’s primary duty consists of the performance of office or nonmanual work directly related to the
For example, does most of the nonmanual work include tasks such as budgeting, auditing, quality control, purchasing, procurement, safety and health, personnel management, HR, labor relations, public relations, government relations, legal and regulatory compliance, and similar activities?
If so, then the employee is most likely exempt under the administrative exemption.
So penalizing him for not wearing your company shirt could pose a significant risk.
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