Exempt employees get paid full salary whether they work 1 hour or 70 hours per work week.
Exempt employees can be held accountable for breaking policy such as “no working while on leave”, however still must be paid.
Exempt employees only may have their salary deducted for a full day of sick leave if they meet certain conditions:
- The employer has a bona fide sick leave plan,
- The employee has exhausted all of their sick leave, and
- The employee is absent for a full day due to sickness or disability.
If the employee has used some of their sick leave, the employer may reduce their pay, but the employee’s actual compensation shouldn’t change. The reduction in salary is offset by the paid sick leave.
Employers can not deduct an exempt employee’s pay for absences caused by the employer or by the business’s operating requirements.
Employers also can not deduct pay if the employee is ready, willing, and able to work but there’s no work available.
Based on a 2023 court case, if an employer has a well-defined Paid Time Off policy, this now allows employers to manage partial-day absences in compliance with FLSA guidelines.
Read more here: https://www.reuters.com/legal/litigation/paid-time-off-is-not-part-workers-salary-us-court-rules-2023-03-15
- Employers can now deduct partial-day absences from an exempt employee’s PTO balance without affecting their salary.
- So whether they choose to use PTO, vacation, holiday, etc. or you (employer) choose to use it, as long as the employee receives a full salary for the week – this is now fine due to the 2023 court case.
Suggested handbook changes related to this topic:
“All full-time employees must ensure at least 40 hours (or whatever amount is FT for your company) are listed on their timesheet. If 40 hours are not actually worked, absences may be covered by benefit time or while on jury duty.”
Many states have their own rules for exempt employees, so it’s important to ensure compliance with state requirements.
Check out examples and additional detailed information here https://webapps.dol.gov/elaws/whd/flsa/overtime/cr9.htm
~ Wendy Sellers
