Workers are often given tools from their employer as a necessary part of performing their job. These tools could include items like cell phones or laptop computers, which are easily lost or damaged. The Fair Labor Standards Act (FLSA) provides an exemption from the minimum wage and overtime pay requirements for employees who are employed in a bona fide executive, administrative, or professional capacity. However, if the employer deducts from that employee’s pay for damage to company equipment, that employer may lose the exemption.
In order to receive the exemption, the employee must be paid a predetermined amount, on a salary or fee basis, of at least $455 a week. A salary is not subject to reduction because of variations in the quantity or quality of the work performed. Therefore, deductions from pay based on damage to company equipment would violate the exemption to overtime and minimum wage laws because the employee’s salary would not be considered guaranteed, as required by FLSA regulations. The Wage and Hour Division has long required that an exempt employee must receive a full, weekly, predetermined salary amount, subject to a few exceptions, in order for the employer to be exempt from the minimum wage and overtime pay requirements.
In addition, an employer faces restrictions if he or she charges a non-exempt employee for damage to company equipment, as that is considered a cost of doing business. Also, an employer can not require an employee to pay for such an expense if doing so would drop the employee’s pay below statutorily mandated minimum wage or overtime standards.