Necessary Policies Under New Wage and Hour Regulations

Volume 3, Issue 13
September 8, 2004

The new Fair Labor Standards Act ("FLSA") regulations, which took effect on August 23, 2004, provide employers with certain rights and defenses if they adopt specific policies. For example, the new regulations now permit unpaid disciplinary suspensions of exempt employees for one or more full days imposed in good faith for violations of workplace rules of conduct. However, such suspensions must be imposed pursuant to a written policy applicable to all employees. Therefore, if an employer intends to take advantage of these new regulations, its handbook must set forth which rules, when broken, may result in suspension from work without pay in whole day increments. The regulations set forth, as examples, sexual harassment and workplace violence polices.

The FLSA regulations also provide employers with a new defense in the event the employer makes an inadvertent improper deduction from an exempt employee's pay. If an employer has a clearly communicated policy that: (1) prohibits improper pay deductions as defined in the regulations; (2) contains a complaint procedure; and (3) provides for reimbursements to employees for any improper deductions and the employer makes a good faith commitment to comply in the future, such an employer will not lose the FLSA overtime exemption for any employees unless the employer willfully violates the policy by continuing to make improper deductions after receiving employee complaints. The regulations also state that the best evidence of a clearly communicated policy is a written policy that was distributed to employees prior to the improper pay deductions. For example, such a policy could be provided at the time of hire, published in an employee handbook or posted on the employer's intranet. The Department of Labor now has a model sample policy on its website (, but it is long and somewhat cumbersome. A more streamlined policy may be better suited for most employers.

Employers are strongly encouraged to adopt these polices to take full advantage of these new rights and defenses.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.