Docked Pay

April 13, 2006

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When people talk about docking pay, sometime they mean reducing an employee's pay for time not worked and sometimes they mean reducing it 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."

Why is the distinction important? Although the federal law does not prevent you from docking your employee's pay, it does require that any such deduction not reduce pay below the statutory minimum. 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.

When you reduce an employee's pay for time not worked, the minimum wage issue doesn't come into question.

Suppose you have an employee who is paid $5.50 per hour and thus makes $220.00 in a typical 40-hour workweek. You cannot dock that employee more than $14 in a typical week because that would drop his pay below the minimum wage level ($5.15 x 40 = $206).

On the other hand, suppose the employee shows up late and leaves early on a couple of days so that he only works 32 hours in the week. Even though you pay him only $176 for that week ($5.50 x 32), you have not violated federal law because you're not "docking" him for time worked.