© 2025 Seyfarth Shaw LLP Massachusetts Wage & Hour Peculiarities, 2025 ed. | 63 c. Violations of the Salary Basis Test As explained above, if an employer makes improper deductions from an employee’s predetermined salary, the employee will no longer be considered to be paid on a salary basis and will no longer be exempt.355 In addition, plaintiff-side attorneys may argue that an employer’s practices may in certain circumstances, even as applied to a small number of exempt employees, compromise the exempt status of other employees similarly situated to that employee.356 An employer may be found to have violated the salary basis test “if the facts demonstrate that the employer did not intend to pay employees on a salary basis.”357 Proof of an actual practice of making improper deductions may establish that the employer did not intend to pay employees on a salary basis.358 A decision by the federal district court in Massachusetts requires employees to identify specific practices that create a genuine issue of material fact as to the employer’s intentions.359 In evaluating whether the employer had an actual practice of improper deductions, the regulations consider several factors, including but not limited to: The number of improper deductions, particularly as compared to the number of employee infractions warranting discipline The time period during which the employer made improper deductions 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 deductions360 If an “actual practice” of improper deductions 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 355 29 C.F.R. § 541.603. 356 Id. 357 29 C.F.R. § 541.603(a). Prior to the 2004 DOL regulations, an employment policy that created “significant likelihood” of improper deductions could result in a loss of the exemption. Auer v. Robbins, 519 U.S. 452, 461 (1997) (holding that exempt status may be lost if an employer has an actual practice or “policy that creates a significant likelihood of [improper] deductions”). Some courts continue to use the significant likelihood test. See, e.g., Martinez v. Hilton Hotels Corp., 930 F. Supp. 2d 508, 521522 (S.D.N.Y. 2013). 358 29 C.F.R. § 541.603(a) 359 Crowe v. ExamWorks, Inc., 136 F. Supp. 3d 16, 28 n.8 (D. Mass. 2015). 360 29 C.F.R. § 541.603(a).
RkJQdWJsaXNoZXIy OTkwMTQ4