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Simpson Thacher’s Time Sheet Policy – Barely Legal?

From the Careerist
By Vivia Chen

Partners, I feel your pain. Squeezed by the bad economy and badgering clients, you really have to hustle to take home that million or two these days. What’s more, you face an enemy at your own firm: Lawyers who won’t or can’t get their time sheets in on time.

Clearly, late time sheets are driving people batty. Recently, I blogged about the partner who’s so frustrated with delinquent timekeepers that he’s taken to threatening them with public humiliation and firings. And before that, I blogged about Simpson Thacher & Bartlett’s new policy of reducing compensation by 20 percent for associates who are ten days late in filing their time records. (Even after the associate is up-to-date on time sheets, Simpson won’t restore the lost wages, except in “exceptional and rare cases,” according to the firm’s employee manual.)  

When a firm like Simpson adopts this kind of draconian policy, it carries authority. But on this one, I’ve been hearing rumbling from lawyers (at other firms) that Simpson might be going too far. “You can fire someone for not getting in their time sheets, but you can’t cut their wages,” one lawyer tells me.

Could a firm like Simpson be skirting the law? I asked an employment-lawyer friend for his take. Here’s what he says: “It is flat out illegal in New York to make deductions from employees’ paychecks for failure to follow company policies.”

In particular, he cites New York labor law section 193, which talks about what’s considered proper and improper deductions by employers:

No employer shall make any deduction from the wages of an employee, except deductions which a. are made in accordance with the provisions of any law or any rule or regulation issued by any governmental agency; or b. are expressly authorized in writing by the employee and are for the benefit of  the employee; provided that such authorization is kept on file on the employer’s premises. Such  authorized  deductions  shall  be limited  to  payments  for  insurance  premiums,  pension  or health and welfare benefits….

But Simpson Thacher has found a clever way to get around this statutory prohibition, explains my friend, by making the salary reduction prospective, rather than retrospective: “I think that is permissible, because it is really not a deduction from pay–it is a reduction in pay, going forward.” Still, he says “the policy could be problematic if they routinely reinstate salary retroactively, because then it could be regarded as a de facto deduction.” (I also asked Simpson to comment, but haven’t heard back.)

So is Simpson out of the woods or not? Well, says my friend, “it would be interesting to know what the New York Department of Labor thinks of this policy. Perhaps someone could request from the department a formal opinion.”

Readers–what do you think of Simpson’s time sheet policy? Does it go too far? Will this cure late time sheets, or is it inviting legal trouble?