Under the recently amended Fair Labor Standard Act regulations an employer can suspend an exempt employee without pay under certain conditions.

Under the Fair Labor Standards Act ("FLSA"), exempt employees are paid on a salary-basis and do not qualify for overtime pay. As a general rule, if an exempt employee performs any work during the workweek, the employee must be paid the full salary amount. One of the exceptions to this general rule is suspensions for certain disciplinary reasons.

After August 23, 2004, deductions from the pay of exempt employees may be made for unpaid disciplinary suspensions of one or more full days imposed for infractions of workplace conduct rules. Specifically, 29 C.F.R. S 541.602(b)(5) of the 2004 amended regulations creates an exception to the prohibition on salary deductions under the salary-basis test for all deductions from pay of exempt employees made as part of an unpaid disciplinary suspension of one or more full days for the infraction of workplace rules.

Therefore, in certain circumstances, an exempt employee can be suspended without pay. An employer may impose in good faith an unpaid suspension for infractions of work-place conduct rules, such as rules prohibiting sexual harassment, workplace violence or drug or alcohol use, or for violations of state or federal laws. In addition, an employer may suspend an exempt employee without pay for a serious safety violation based on a safety rule of major significance such as those rules established to prevent serious danger or injury on the job. This provision refers to serious misconduct, not performance or attendance issues. Also, the suspension must be imposed pursuant to a written policy applicable to all employees.

Thus, for example, an employer may suspend an exempt employee without pay for three days for violating a generally applicable written policy prohibiting sexual harassment. Similarly, an employer may suspend an exempt employee without pay for twelve days for violating a generally applicable written policy prohibiting workplace violence.

Any deductions which are made to the exempt employee's salary which do not comply with the regulations and FLSA may cause the employer to lose the exempt status for that employee.  In that case, the employer may be liable for overtime pay for that employee. Therefore, careful consideration should be given to compliance with the regulations before deducting pay from an exempt employee.