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A Better Partnership

Publications

Mar 2006
30
March 30, 2006

Do You Have a Safe Harbor Provision?

The Department of Labor's "white collar" regulations exempt certain employees from the Fair Labor Standards Act’s minimum wage and overtime requirements. In order to qualify for the exemption, the employee must be paid a minimum salary of $455 per week and be paid on a "salaried basis." Being paid on a salaried basis means that the employee’s salary is predetermined and, except in certain limited circumstances, is not subject to deductions based on the quality or quantity of work performed.

The DOL's regulations create a "safe harbor provision" which allows employers to avoid losing the exempt status of their salaried employees due to inadvertent but improper deductions from their salaries. In order to take advantage of this safe harbor, however, the employer must have a "clearly communicated policy" prohibiting improper deductions and setting out a complaint or reporting procedure. In the event of an improper deduction, the employer must promptly reimburse the employee and pledge future compliance. The policy should be in writing and distributed to employees at the time of hire, published in a handbook, and/or be available on the company intranet. If you have not yet implemented a safe harbor policy for your company, please contact Jonathan Kok at 616.752.2487.

 

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