Employers sometimes deduct monies from their salaried employees’ paychecks for various reasons.  These deductions can prove costly in unpaid overtime lawsuits, as a recent opinion issued by a federal judge in Dallas, Texas illustrates.  In Miller v. Team Go Figure, Civil Action No. 3:13-cv-1509-O (N.D. Tex. May 13, 2014), three workers sued their former employer for unpaid overtime under the Fair Labor Standards Act, or FLSA.  The employer moved for summary judgment, claiming that one of the employees was subject to the executive or administrative exemptions of the FLSA.  The FLSA includes a requirement that, in order to qualify for either of these exemptions, the worker must be paid on a salary basis.  The worker argued that the employer failed to meet its burden of proving she was paid on a “salary basis” since it improperly deducted amounts from her paychecks. For an employee to be considered paid on a “salary basis,” an employee must “regularly receive[] each pay period on a weekly or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of work performed.” 29 C.F.R. § 541.602(a). Section 541.602(b) provides, generally, that deductions may be made for absentee-ism, sick leave (in certain circumstances), penalties imposed in good faith for infractions of safety rules, unpaid disciplinary suspensions, and . . . for mistaken overpayments.” 29 C.F.R. § 541.602(b).

The worker cited evidence showing deductions from her paychecks totaling $7,400.00, which were labeled as “payroll advances,” even though no payroll advance was made.  The Court concluded that these deductions raised a material factual issue as to whether the worker satisfied the salary basis test, noting that the burden of proving that the employee is exempt from coverage rests with the employer and that exemptions to overtime pay are affirmative defenses and “[t]hese exemptions are construed narrowly against the employer[.]”  The Court stated that “[e]xempt status will be limited to those employees ‘plainly and unmistakably’ falling within the ‘terms and spirit[]’ of the exemptions.”  Accordingly, the Court held that the employer failed to meet its summary judgment burden to show that the worker was subject to the executive or administrative exemptions and denied the motion for summary judgment and allowed the unpaid overtime lawsuit to go forward.

About the author: Josh Borsellino represents workers to get them the unpaid overtime they deserve.  If you have questions about unpaid overtime, fill out this online form or call 817.908.9861 or 432.242.7118 for a free consultation.