How much can you legally dock an hourly worker's pay for lateness?

Eight per cent of employees claim to arrive to work late at least twice a week, according to a 2010 Career Builder survey.

Chronic tardiness could lead to lower productivity and the appearance of favouritism, so you might try docking a tardy worker's pay as punishment. While you can dock a worker's pay, doing so can violate his rights.

Exempt Employees

You might not be able to dock the pay of an exempt, or salaried employee. In general, salaried employees make a set amount of wage each year regardless of the number of hours worked.

If you dock pay, you might turn them into nonexempt employees, which means paying them overtime.

Only in a few instances can you dock the pay of an exempt employee, such as during their first or last week on the job. In this case, you can calculate their hours and portion that based on their weekly work schedule divided by the 52 weeks in the year.

Nonexempt Employees

As soon as a nonexempt employee clocks in you must pay him. For instance, if Employee X clocks in at 9:05, you could not "dock" him by not paying him until 9:30. However, you can institute a rounding system. Most employers pay by quarter-hours. In this scenario, an employee that clocks in at 9:08 does not officially receive pay until 9:15. Any rounding system must benefit the employee and employer equally.

Thus, if the employee clocks in at 9:07, you must pay him as if he were clocked in at 9:00. You can offset tardiness with extra work time. If that same Employee X clocks in at 9:07 and out for the day at 5:07, you can pay him as if he worked eight hours.

You also could institute a policy that you automatically round down at the beginning of the shift and round up at the end. Some states allow you to impose a fine on tardy workers as long as they agree to this in writing before the incident occurs.

Considerations

Have your human resources manager review the Fair Labor Standards Act when devising your lateness policy. Some punishments may backfire. For instance, if you require employees to wait on work premises 15 or 30 minutes before clocking in, you must pay them for that time because any time spent on the employer's premises counts toward pay.

Also, you must make sure the employee's pay meets the minimum wage. If you drop an exempt employee's salary below twice the prevailing minimum wage, you could end up owing thousands of dollars in back overtime pay.

Tips

If an employee is chronically late, you might be able to avoid potential legal complications by scheduling the employee for later working hours.

You could suspend the employee for one day to a week, or require the employee to stay off work premises until the docked-pay period ends.

Also, consider verbal and written reprimands, such as a poor employee appraisal. Whatever option you choose, it is best to take the same action for all employees.