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Sample Policy on Employee Compensation (Safe Harbor Provision)

It is the stated policy of the Dept. of X to determine compensation issues in accordance with the Fair Labor Standards Act (FLSA) regulations, where applicable. Pursuant to the FLSA, certain employees may be exempt from or eligible for overtime compensation. Additionally, an employee in a collective bargaining unit may receive overtime compensation pursuant to contract. This policy is not meant to affect any provision in the collective bargaining agreements. Rather, the provisions of this policy are designed to apply to employees who are not in a bargaining unit and are not otherwise eligible for overtime compensation.

Employees who are exempt from overtime compensation may be eligible to receive compensatory time, but only in circumstances where the employee has properly followed agency procedure for requesting and then working these extra hours.

Under the FLSA, employees who are exempt from overtime compensation generally may not have their pay reduced for variations in the quantity or quality of work performed. Employees who feel their pay has been improperly reduced should promptly report their concern pursuant to the complaint procedures specified below.

Deductions in Pay
Under certain circumstances, the Dept of X may make reductions in pay of employees who are exempt from overtime. Listed below is a non-exhaustive list of some of the more common deductions that are permissible in accordance with the FLSA, agency policies and practices.

  1. When an employee has exhausted personal, vacation, and/or sick leave and is absent from work.
  2. Penalties imposed by infractions of safety rules of major significance. [Note: Agency policy on safety should be very clear regarding major versus minor safety violations and the consequences of such violations. A deduction from pay as a penalty for violations of major safety rules can be made in any amount.]
  3. Unpaid disciplinary suspensions of one or more full days for serious workplace conduct violations in accordance with the Dept. of X’s disciplinary policy. [Note: Agencies must establish a written policy, applicable to all employees, specifying workplace conduct rules and the consequences for violating such rules in order to make a deduction under this section. The preamble to the final rule suggests that “workplace conduct” violations should be of a serious nature, and does not apply to discipline for performance or attendance issues. Legal advice is therefore encouraged before updating any workplace conduct policies to include partial week suspension as a disciplinary option for exempt employees.]
  4. Deductions for unpaid leave taken in accordance with a certified absence under the Family and Medical Leave Act.

Complaint Procedure
The Department of X and its employees are committed to administering a compensation program in compliance with the requirements of the FLSA. Thus, when an employee believes that an improper deduction in pay has been made the employee must promptly report their concern pursuant to the following complaint procedure. However, complaints under this policy should not impact on or act as a substitute for an employee’s right and responsibility to also timely file a grievance or administrative appeal, where otherwise applicable.

  1. Employees who believe their pay has been improperly reduced should immediately contact [name and phone/email of HR professional or other designated representative] and formally report their concern pursuant to this complaint procedure.
  2. The employee will be asked to specify in writing, using the guidance above, the specific circumstances of the pay deduction and whether it has occurred on other occasions.
  3. [Designated representative] will then investigate the claim by reviewing pay records and likely interviewing other employees, supervisors or managers, as well as the payroll representatives handling the employee’s pay, to determine the nature and scope of the employee’s complaint.
  4. If pursuant to this review a compensation deduction is found to have been made in error, the Dept. of X will reimburse the employee as expeditiously as possible (but in no case longer than two pay periods from the identification of the problem).
  5. If a compensation error is found, the Department’s designated representative will further determine if this was an isolated incident or a pattern of conduct that requires further action on the part of the agency. If warranted, the Department may make retroactive corrections to assure that compensation deductions are completed in compliance with the FLSA.
  6. The resolution of the situation will be documented (including confirmation on the part of the employee that the situation has been resolved) and placed with the employee’s records.
  7. Following the identification of such a problem, the Dept of X will establish a practice to regularly audit employee pay records to ensure no further issues arise of a similar nature.
  8. Employees who utilize this complaint procedure shall not be retaliated against for making use of this policy. Employees with questions concerning this policy are encouraged to contact [name and phone/email of HR professional or other designated representative].

    [Note: This policy must be distributed in writing to all employees via every available communication tool including the employee handbook, policy manual, agency intranet, e-mail system, etc. HR staff should be educated regarding the revised agency policies and the new FLSA regulations.]

General Contact

30 East Broad Street, 27th Floor
Columbus, Ohio 43215

Phone: 614.752.5393
Email: dashrd.hrpolicy@das.state.oh.us

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