Restaurant docked exempt workers’ pay, lands in hot water: Here’s why Franchise paid nearly $80K in back wages and damages Payroll pros must proceed with caution when handling deductions from workers’ pay, especially if they’re classified as exempt. If deductions aren’t handled properly, employers may end up on the hook for thousands in back wages and penalties, as one restaurant franchise learned firsthand. Shiprock Enterprise LTD and Junior Senior, Inc which operated two Subway restaurants in Texas, would dock its salaried managers’ pay if they worked less than a full day. However, that meant they weren’t receiving a guaranteed salary every workweek, as required by law. Because of that, the exemption no longer applied and managers were considered nonexempt. An investigation by the Dept. of Labor (DOL) found that most managers worked between 55 and 60 hours per week which made them eligible for overtime. As a result, the franchise paid almost $79,999 in back wages and damages to 52 employees. Salary requirements To pass the salary basis text, exempt employees must receive a predetermined salary each pay period (generally at least $455 per week). Salary can only be reduced in limited circumstances, such as if an employee misses one or more full days of work for personal reasons or if a worker is using unpaid medical leave during the workweek. More info: dol.gov/whd/overtime/fs17g_salary.pdf