Docking Pay

Docking pay means reducing an employee’s pay to recoup expenses due to breakage, spillage, cash register shortage, and the like. Technically, reducing an employee’s pay for hours not worked is not docking. Federal law doesn't prevent you from docking your employee’s pay, but it does require that any such deductions not reduce pay below the statutory minimum wage. So, if you're docking for things like spillage or shortages, you might have to carry over some of the amount to the next pay period, to avoid breaking the minimum wage law.

If you dock an exempt employee for any reason, other than for a major safety violation, that employee loses their exempt status for the entire pay period. If this occurs, then you'll have to pay any overtime that may be due for the period.

Effective August 23, 2004, the Department of Labor expanded the permitted reasons for docking an exempt employee's pay to include serious conduct violations, such as workplace violence or sexual harassment. In addition, the new rules provide that if an employer makes an improper deduction from an exempt employee's pay, the employee's exempt status will remain intact if the employer has a clearly communicated policy prohibiting improper pay deductions (including a complaint mechanism), reimburses the employee for the improper deduction, and makes a good faith commitment to comply in the future.