Charging leave for exempts--again!

cstorms

We are a governmental employer- small local housing authority. We have a policy that exempt salaried employees are not charged vacation or sick leave hours for absences of less than half a day (4 hrs or less), but they do use leave if they're gone for more than 4 hours on a day they work. We understood this complied with FLSA (we're in the State of Washington). My Director was just told by attorneys addressing a director's conference that a recent case asserted that even governmental employer's cannot charge leave against exempts for anything less than a whole day's absence. She didn't get the spelling on the case, but it was Drinkwith(worth?) v. employer's name and happened in the fall of 2000. Can someone give me a definitive answer on this issue again? Or point me to where I could read on this case? Thanks.

Rockie

I haven't heard about this case, but just out of curiosity, what do you base a "day" on for exempt level people?

We don't charge exempt employees for leave if they work any porton of a day. The extra hours they put in more than compensates for occasionally taking off several hours early. Most people of this caliber don't abuse the privilege; they don't have the time to do so! If we have the occasional maverick, that comes in for half and hour and then leaves for the day, it is certainly addressed with them. Most people would usually work at least half a day before taking off.

moneyman

I would be interested in this case too. I have attended several seminars over the past few years and each of them were consistent in stating that you can charge the leave bank if you had a bona fide plan in place that stated you could do that. You just couldn't adjust their salary, they still have to get paid for the full day. However, I must admit that since I am not a governmental employer, I could be missing out on the information that specifically targets that area.

njjel

And what happens when the exempt employee has exhausted their leave bank? Do you dock their pay or continue to pay them?

moneyman

We continue to pay if they exhaust their leave, but the leave then becomes an unexcused paid leave and results in disciplinary action. Some salary/exempt might find that unfair, however, in our practice, we try to avoid OT and do a reasonable job of keeping people close to 40 hours. So, when they exhaust all of their leave, it is just like anyone else who exhausts their time in receiving a verbal, then written warning (except they still get paid and hourly people do not). Only in the cases of emergencies will the leave be considered excused.

When we first discussed the use of 1/2 increments, we polled the salaried employees and found that they found it reasonable to only be charged in 1/2 day increments. Most times, they want only an hour or two for an appointment and they do not get charged. About the only time that they get charged is when they schedule personal time to leave for the weekend early, or add that extra 1/2 day to a vacation to get an early start or a late return.

NaeNae55

I would be very interested in this case too. My husband works for the state and they use a 4 hour leave policy. He is allowed 1 hour for doctor visits, but anything more and he has to use a 4 hour block of leave, even if he was gone for 2-1/2 hours. His supervisor is reasonable and he has sometimes allowed some "make-up" time instead, but in general the state is strict about this.

Don D

I worked in a Department of Labor funded agency for more years than I care to recall. Not only did our policies allow FOUR-HOUR leave blocks, we had to apply for and take leave in blocks of HOURS, one, two, three, four, whatever we missed. It was a bookkeeper's nightmare...about twelve various time codes to break the day into plus an hour here or there of a variety of leave types.

cstorms

I have the court's conclusion on the case that was cited. It's a Supreme Court of WA case Dan Drinkwitz & Caproni v. Alliant Techsystems, Inc. It's a lengthy read, but because WA State law does not define salary-basis, they fall back on the FLSA for the interpretation. This employer, Alliant, had several practices that conflicted with FLSA. They had exempts record all hours worked, they set workday schedule requirements for exempts, they had weekly hour quotas and required make up for deficiences in the weekly hours. They allowed make-up through use of banked comp hours, working more than required in another week, or docking vacation leave time. They even had a discipline plan for those not meeting the hours quota. They had, in the past, even docked pay but were sued for that in 95ish and they argued successfully that it was a payroll clerk's error, someone who didn't understand exempt wages. They repaid those hours in 96 and went on from there.

The plaintiffs won this case and the Supreme Court gives a lot of good analysis of which of these acts violates salaried basis the most (it's a good read, especially if you're in WA). Here's the key to my original question:

Supreme Court: 5. "Make up" from vacation time is inconsistent with salaried employment and is most akin to "docking" of any of the "make up" practices. In Abshire v. County of Kern (9th Cir.1990), the court said "a strong argument can be made that even if deductions were required only from fringe benefits such as leave time, and not from base pay, the affected employees would still not qualify (as exempt employees)."
6.........
7. Pay Deductions in Less Than Full-Day Increments for Partial Day Absences.

Making deductions in pay when employees fail to meet hourly work quota requirements is inconsistent with salaried employment. Federal law under the FLSA clearly prohibits this practice. >29 CFR 541.118(a). We therefore hold that it is improper under the MWA (Minimum Wage Act) to "dock" employees' pay when they fail to meet hourly work quota requirements. To make an overtime claim for improper "docking" under the FLSA, an employee's salary must be "subject to" improper deductions..... An employee's salary is "subject to" reduction when there is (1) an emplyoment policy that creates a "significant likelihood" of making partial day deductions, or (2) an "actual practice" of making deductions.

In sum, we find that when Alliant's policies and practices regarding plaintiffs are reviewed in their totality, plaintiffs were not treated as "salaried" employees under the MWA." End of quote from Supreme Court conclusion.

Well, folks, that's enough for me to change our policy of partial day deductions from leave for exempts. I'd be interested in what the HR gurus on the site here think about applying this case to more than Washington. Thank you all for your responses!

Colleen

moneyman

Thanks for finding the case. I think that the original post actually was addressing the issue of being able to charge the leave banks, not deducting from pay which is what it looks like the case is addressing.

I don't think I have seen a case that has said that you could not charge the leave bank. But, like the case above cited, I have seen many instances where they address reducing a salaried persons weekly pay.

It seems like many of us use the policy of charging partial day absences and I think we will continue to use this policy. I have not yet been convinced that this is in opposition of FLSA.