Brett Bartlett and Sheandra Clark Published in Employer's Guide to the Fair Labor Standards Act "Protecting Salary Deductions with the Window of Correction and the Safe Harbor"

Brett Bartlett and Sheandra Clark’s article, “Protecting Salary Deductions with the Window of Correction and the Safe Harbor,” was published in the February 2008 issue of Employer’s Guide to the Fair Labor Standards Act. In their article, Brett and Sheandra examine the 2004 modifications that the Department of Labor implemented with regard to white-collar exemption rules for the Fair Labor Standards Act. Specifically, they note that the “DOL created two lifelines—the window of correction and the safe harbor provision—in order for an employer to continue to utilize the white-collar exemption in spite of improper deductions.”

The authors note that since “mistakes can and do occur, the FLSA provides an employer the chance to fix prohibited pay deductions.” With the implementation of the 2004 regulations, “improper deductions that are ‘isolated or inadvertent’ do not result in the loss of the overtime exemption if the employer reimburses the employee for the wrongful deduction.” Brett and Sheandra note that although the new window of correction “does not require employers to make corrections within a specific time… remedial measures should be made within a reasonable time period after learning about the error.”

In addition to the window of correction, the authors note that the “safe harbor provision provides employers with the opportunity to assert a defense, broader than the window of correction—that is applicable regardless of the reason for the improper deduction.” The authors caution, however, that “In the absence of interpretative guidance from DOL or the courts on the effects of the safe harbor policy, it is important that an employer act on complaints alleging a violation of the salary basis test and take corrective action where appropriate.”