Under the Fair Labor Standards Act (FLSA) improper deductions will defeat the exempt status of all employees in the same job classification working in similar situations. This type of inadvertent administrative error could be costly for employers whose exempt employees work long hours. The new FLSA regulations provide for a "safe harbor" which will protect the exempt status if the employer inadvertently makes improper deductions from an exempt employee's salary in violation of the new regulations. To ensure that employers receives the benefit of the safe harbor provision, employers should add provisions to their employee handbooks or other policies which state that the employer intends to comply with all FLSA deduction requirements and which direct employees to report any suspected improper deductions to the human resources department. For additional information, please contact Mary Elizabeth Davis.