Employers Who Adopt A Form Of The DOL's New Model Safe Harbor Policy Can Better Protect Themselves From FLSA Exempt Status Litigation

The U.S. Department of Labor’s Wage and Hour Division has issued a model “safe harbor” policy under its new Fair Labor Standards Act exempt status regulations. Previously, employers who made improper deductions from an exempt employee’s salary (i.e., an improper partial-day deduction) could lose that employee’s exempt status. Under the new safe harbor regulation, an employer who makes improper deductions from an employee’s salary will not lose the employee’s exempt status if the employer:

• has a clearly communicated policy that prohibits improper pay deductions and includes a complaint mechanism;
• reimburses employees for improper deductions; and
• makes a good-faith commitment to comply in the future.