What happens if an employer has a practice of making improper deductions from salary?

What happens if an employer has a practice of making improper deductions from salary?

• A. The exemption is preserved
• B. It results in the loss of the exemption
• C. It only affects new employees
• D. It requires a formal appeal

Answer: (B)

The correct answer reflects the fundamental principle in employment law regarding salary exemptions. If an employer has a practice of making improper deductions from an employee's salary, it generally leads to the loss of the exemption for that employee. This loss occurs because exemptions, particularly under the Fair Labor Standards Act (FLSA), are contingent upon employees receiving a predetermined salary that is not subject to improper deductions. When deductions that violate the established criteria are made, even if the employee's overall compensation is above the threshold for exemption, it can disqualify the position from being considered exempt. This is crucial because maintaining the integrity of the salary basis is essential for preserving exempt status. Understanding this principle helps clarify why improper deductions can have broad implications not just for the affected individuals but also for the employer's compliance with labor laws. The other choices do not accurately reflect the consequences of improper deductions; they either minimize the impact or suggest a process that does not relate to the immediate loss of exemption status.

The correct answer reflects the fundamental principle in employment law regarding salary exemptions. If an employer has a practice of making improper deductions from an employee's salary, it generally leads to the loss of the exemption for that employee.

This loss occurs because exemptions, particularly under the Fair Labor Standards Act (FLSA), are contingent upon employees receiving a predetermined salary that is not subject to improper deductions. When deductions that violate the established criteria are made, even if the employee's overall compensation is above the threshold for exemption, it can disqualify the position from being considered exempt. This is crucial because maintaining the integrity of the salary basis is essential for preserving exempt status.

Understanding this principle helps clarify why improper deductions can have broad implications not just for the affected individuals but also for the employer's compliance with labor laws. The other choices do not accurately reflect the consequences of improper deductions; they either minimize the impact or suggest a process that does not relate to the immediate loss of exemption status.