Federal wage and hour laws don't prevent you from making deductions from a nonexempt employee's pay for tardiness or for failure to punch a time clock (if you have one). If you do adopt this practice, you must:

• compute the regular rate before the deduction is made
• count all the time actually worked by the employee when figuring overtime hours
• ensure that the employee's regular rate meets the minimum wage requirement free and clear of the deduction
• not make deductions from overtime pay

It's a common practice for employers to "dock" late employees for 15 minutes or 30 minutes when they come in a few minutes late. However, if an employee starts working before that period of 15 or 30 minutes has elapsed, you have to pay the employee for the actual time that he or she worked and cannot "dock" him or her for the full amount of the period.

 

Joe calls in to tell you he'll be 10 minutes late. According to your policy on tardiness/absenteeism, he'll be docked for 15 minutes' time. If Joe arrives 10 minutes late and begins working immediately, you have to pay him for the extra five minutes that he worked.

To avoid this kind of confusing scenario, you should make it a policy not to allow the employee to begin working before the docked time period has elapsed. That way, you know how much time the employee has worked, and you won't have to start dealing with paying employees by the minute.