What does docked pay mean?
When your employer takes money out of your pay, it is a “deduction”. Some people call it “docking” your pay. Your employer must deduct some money, like taxes, and money a court has ordered, like child support. He can take some deductions that you agree to and that you want taken out, like an IRA or a health plan.
Can a employer dock the pay of a salaried employee?
While federal law prohibits an employer from docking pay of employees based on the quality or quantity of work, there are some situations where pay docking of salaried workers is permitted. Below, the experienced Maryland employment lawyers at Peter T. Nicholl Law Offices explain when employers can dock the pay of salaried employees.
What does it mean to reimburse an employee for expenses?
An employee reimbursement is the act of paying an employee back for expenses they covered with their own money in their work for the company. Throughout the regular course of work, employees will occasionally need to pay for business expenses with their own money.
What happens if employee fails to return excess reimbursement?
The employee fails to return excess reimbursements or allowances in a reasonable amount of time. The employer advances or pays an amount to an employee regardless of whether they expect the employee to have business expenses. The reimbursement would have otherwise been paid as wages. See IRS Publication 15 for more details.
Do you pay taxes on employer medical reimbursements?
Medical expense reimbursements are tax-free for employees, and tax-deductible for employers. Health insurance is not taxed for either employer or employee. With a well-constructed reimbursement plan in place, most businesses can utilize an accountable plan and avoid taxing the reimbursements for business expenses.
When does an employer have to pay docking?
When an employer reduces an employee’s pay, it is called pay docking. Docking the pay of exempt employees is only permissible in certain circumstances. The Fair Labor Standards Act (FLSA) governs wage and hour laws of nonexempt employees.
Can a employer dock an employee’s vacation time?
But it cannot dock the employee’s pay. Importantly, the employer is allowed to dock vacation time and force the employee to use that to cover the hours missed. But the employees pay may never be docked. So what happens if the employer breaks this rule and docks pay? Well then the employer has just lost the FLSA “exemption” as to that employee.
Can a salaried employee be docked for missing work?
One important one that employers often ignore is the rule against docking pay. Exempt employees who are late or who need to leave work early – for doctor’s appointment, child care, whatever – cannot have their pay docked for missing a couple of hours of work.
How are employee expense reimbursements treated as wages?
They are deductible by the employer as business expenses. If any of these conditions are not met, the reimbursements are treated as paid under a nonaccountable plan, which are considered wages, treated as supplemental wages subject to income, social security, Medicare, and FUTA taxes.