Mass-Peculiarities: An Employers Guide to Wage & Hour Law in the Bay State 2022 Edition

90 | Massachusetts Wage & Hour Peculiarities, 2022 ed. © 2022 Seyfarth Shaw LLP • The number and geographic location of employees whose salary was improperly reduced • The number and geographic location of managers responsible for taking the improper deductions • Whether the employer has a clearly communicated policy permitting or prohibiting improper deductions 493 If an “actual practice” is found, the exemption may be lost during the time period of the deductions for all employees in the same job classification working for the same managers responsible for the improper deductions, even if some of those employees were not subject to improper deductions. 494 Employees in different job classifications or who work for different managers do not lose their status as exempt employees. 495 Because violations of the salary basis test can have serious and widespread ramifications, employers should seek the advice of legal counsel before making deductions from an exempt employee’s salary, including attempts to recoup monies from the employee’s final paycheck (such as negative leave balances or tuition costs). While Massachusetts has adopted the FLSA’s salary basis requirements, violations of these requirements by a Massachusetts employer impose greater liability because of the Commonwealth’s mandatory treble damages law, described in detail in Section XVIII.G. c. Safe Harbor for Employers That Make Impermissible Deductions Improper deductions that are either isolated or inadvertent will not result in loss of the exemption if the employer reimburses the employees for the improper deductions. 496 The First Circuit has not interpreted this federal regulation, but other courts have held that this “window of correction” may apply even where corrective payments were made years after an improper deduction occurred. 497 Courts generally have found that the provision does not apply where the employer had a policy of making improper deductions, or where the facts demonstrate that the employer did not intend to pay the employees at issue on a salary basis. 498 Any employer that suspects that it 493 29 C.F.R. § 541.603(a). 494 29 C.F.R. § 541.603(b). 495 Id . “ [F]or example, if a manager at a company facility rout inely docks the pay of engineers at that facility for part ial-day personal absences, then all engineers at that facility whose pay could have been improperly docked by the manager” may be subject to the argument that they are misclassified; however, the exempt status of engineers “at other facilit ies or working for other managers []would remain exempt .” Id . 496 29 C.F.R. § 541.603(c). 497 See , e.g. , Moore v. Hannon Food Serv., Inc. , 317 F.3d 489, 498 (5th Cir. 2003) (reimbursement made five days before t rial preserved exempt ion). Because the DLS has adopted the federal regulat ions addressing the white collar exempt ions, arguably the safe harbor applies under Massachuset t s law as well. 498 See , e.g. , Kennedy v. Commonwealth Edison Co. , 410 F.3d 365, 372 (7th Cir. 2005) (“ If the employees can showthat the deduct ions were not merely happenstance, but a rout ine pract ice or company policy, the employer may not rely on the margin of