Deduction for sick leave for exempt employee?

It is my understanding that you cannot deduct partial days absences for exempt employees. However, can you require the exempt employee who leaves for an hour for a doctor's appointment to deduct this hour from their bank of sick leave hours? Right now, we deduct for whole days (sick) absences only. Someone in HR now thinks we should keep track of hourly absences for sick leave purposes. Once you start tracking hourly absences, seems to me the exempt status is in jeopardy. HELP!

Comments

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  • [font size="1" color="#FF0000"]LAST EDITED ON 09-25-02 AT 08:23PM (CST)[/font][p]I want to make sure I understand what the HR person is suggesting and what your particular concern is...

    The HR person is suggesting that if the exempt employee is absent for part of the workday due to doctor's appointment, that that time be deducted from the employee's accrued sick leave time, e.g., two hours away from work winds up with two hours being taken off the accrued sick leave time or other appropriate and available time on the books. Your concern is that by doing this, the employer would be tracking an exempt's time on an hourly basis thus jeopardizing the employee's exempt status. Did I restate the positions correctly?

    If so, my response is:

    From all that I've read in both resource materials on FLSA and exempt status and the FLSA regulations themselves, DOL Wage and Hour Division is essentially only concerned with the inappropriate docking of the exempt employee's salary. It sees fringe benefit/accrued sick leave time to be outside its responsbilities. As long as the docking of the benefits doesn't impact the private sector exempt employee's salary for those partial days' absences, then under DOL's guidance, the private sector employer may do it. If there is no appropriate, available accrued time on the books to cover the partial day's absence then of course, it is still prohibited to dock for a partial day's absence (except for intermittent or reduced FMLA leave).

    But if you're a governmental entity, under 29CFR541.5d, if your governing body has enacted ordinances to permit the exempt employee's pay to be docked, even if there is no accrued time benefit, the docking of the partial day's absence is permitted without loss of exempt status.

    Regarding your concern about the tracking of the exempt employee's time, on the face of it, tracking of time is not inherently in violation of FLSA resulting in loss of the employee's exempt status. FLSA recognizes that an exempt employee's time may be tracked for several reasons, including for billing purposes. The real issue of tracking an employee's time as it relates to the possible loss of exempt status is whether that tracking does in fact affect the salary. In other words, is the employee's salary docked as a result of the tracking? If it is, then, of course the exempt status is jeopardized.

    But other than for billing and accounting purposes or for dealing with accrued time balances as suggested in the first part of your post, what would be the purpose of tracking an exempt employee's partial day's absence, assuming it was approved by the supervisor?
  • You stated the problem correctly and I appreciate your answer. You explained everything I needed to know. We didn't want to be in the position of having to track hours, you know 15 minutes here, an hour there. Right now, if you leave for a dr.'s appt and are gone for an hour, that amount of time is not recorded against your sick leave bank, only when you are absent for a full day. We have so many that are working more than their regular hours, night meetings, weekends, etc. and then having to "account" for a 45 minute appointment seems to be a bit petty. Thanks again!
  • I am very new to the world of Human Resources, so I feel a bit overwhelmed trying to absorb all of this new information, but I do have a question on this-

    I know if it an exempt employee takes an hour or so, there is no need to record it, but if someone came in and worked the first part of the day and went home the second half sick, how do I count this, since they were in 4 or 5 hours working? Do I have to count an entire day or what? Thanks for any help on this!
  • [font size="1" color="#FF0000"]LAST EDITED ON 11-14-02 AT 01:16PM (CST)[/font][p]If the employee is exempt and not on FMLA intermittent leave, then you would have to pay the "salary" for that entire day since you may not otherwise dock the day's salary for a partial day's absence.

    As noted above, if you have an accrued leave bank, subject to your policies, and what regulations there may be in your state on exempt status, you may dock that 4 or 5 hours absence from the appropriate accrued leave time bank under FLSA (but you may NOT dock salary, even if there are fewer hours in the leave bank than the number of hours of actual absence).
  • The age old question, Hatchetman, and I would like your response on this, is: "When your exempt person has exhausted all possible leave banks, has no more leave of any sort and misses one or more, perhaps 8 or 10 more days due various circumstances, how do you address the issue other than as disciplinary, when you cannot dock their pay?" If exempts 'learn' from us that they can continue taking sick days beyond those covered by their leave bank, what are we teaching them? I know what the law is....I want to hear some answers on the practical impact of this and how it's handled by some of you.
  • We don't dock the exempt employee but we follow the handbook policy and they are written up. All Department Director's reviews are done during the same month and we have a bonus plan. The employee's review would reflect the excess absenteeism and his "bonus" would be affected. Fortunately, we haven't had that problem yet. Maybe its because we are a life care community and have very few exempt positions. There are only 8 department directors.
  • Our vacation time is accrued until the employee's anniversary date. On that date his vacation "bank" is updated to the 80 or 120 hours they have earned. For the personal/sick time, they accrue 4 hours a month for a total of 48 hours. This hits their personal/sick day "bank" on January 1st. (We assume they will be working the entire year.) If an employee is absent, and has already used up all of their vacation and sick time, we have a heart-to-heart with them. We pay them for that day and inform them that future absences will result in disciplinary action AND payment for the day will come from their accrued vacation time which they would have received come their anniversary date.

    I have found that, in most cases, they shape up. Those that continue to have a poor attendance, then our disciplinary procedure eliminates them.
  • My concern and question relate more to the really genuine needs to exceed the leave bank balance, moreso than the 'shape up' discipline situation. I can see real problems trying to discipline somebody who is genuinly sick 8 more times after he has exhausted his sick leave but can't be docked. Then there's the exempt who has been on FMLA for his parent's going into the nursing home and his vacation leave was concurrently burned during that and he wants to be off a couple of days at Christmas and 'without pay' is his suggestion. According to FLSA, we tell him we can't NOT pay him and we send the message throughout the company that this can be done. I suppose we can tell him he cannot be off a couple of days at Christmas. Surely I'm not the only one with this dilemma out there.
  • Don: The "genuine"illness doesn't fall under FMLA? How can you discipline one employee who calls in sick and have a problem disciplining another employee who is genuinely sick? I know what you are asking but we are responsible to ensure company policies and procedures are administered evenly. Do you have a policy called "Non Paid Personal Leave"? There will be times/occasions (either an emergecy or of a personal nature) that may require an employee be away from work. In such cases a request may be approved up to 30 days and can be extended for justifiable reasons up to a maximum of 60 days. That's what I do in cases that make me remember that I'm human.
  • >My concern and question relate more to the really genuine needs to
    >exceed the leave bank balance, moreso than the 'shape up' discipline
    >situation. I can see real problems trying to discipline somebody who
    >is genuinly sick 8 more times after he has exhausted his sick leave
    >but can't be docked. Then there's the exempt who has been on FMLA for
    >his parent's going into the nursing home and his vacation leave was
    >concurrently burned during that and he wants to be off a couple of
    >days at Christmas and 'without pay' is his suggestion. According to
    >FLSA, we tell him we can't NOT pay him and we send the message
    >throughout the company that this can be done. I suppose we can tell
    >him he cannot be off a couple of days at Christmas. Surely I'm not the
    >only one with this dilemma out there.



    An exempt person can be docked for full day absences, when the employee absents himself from work for a day or more for personal reasons other than sickness or accident. However, I do see how this may be viewed as unfair, after the employee has used vacation time for FMLA purposes. Our company does not use accrued benefit time in increments of less than one day, so far we have not had abuse of the system.

  • This addresses a concern of mine I have right now. Exempt employees with no accrued vacation - must with the company 12 full months to earn vacation. No sick time is given or can be earned at this company if you are exempt.

    So if a salaried takes the day before thanksgiving off ...they worked Monday and Tuesday are they to be paid?
  • Ok.. I truly thought I had this down, but the more I read the more confused I get. Am I on the right track here.... We are a public company and have a "PTO bank of hours for all employees. IF we have an exempt employee who has exhausted all their hours in the bank, but is then off one day due to illness (NOT FMLA) we CAN or CAN'T dock them for one day's pay? I realize we can't do partial days, but I'm getting two different stories - one tells me that if they work ANY hours during the week, we must pay them for the full week (so the only way we could dock them for being sick is if they were sick the entire week)I am also reading that IF they wanted to take a day off for "personal reasons" (not sick) then we COULD dock them for that day? (I'm looking at California and Arizona). Would appreciate any guidance on this!
  • As odd (and often unworkable) as it may sound, my understanding is that the private sector exempt employee who has run out of leave, who is absent for sickness for less than a full week must, according to FLSA, be paid his guaranteed salary and cannot be docked. Not sure about Arizona and God knows I won't guess at California procedure.

  • [font size="1" color="#FF0000"]LAST EDITED ON 11-20-02 AT 09:04PM (CST)[/font][p]

    Don, I apologize for not responding earlier to your post, but I just came across it.

    My earlier post about being able to deduct an exempt employee's accrued time balances for partial days' absences was just a statement of what may be done. Whether it is a good practice or not with any employer depends on the policies and practices it has regarding absences. I personally don't like docking hours balances for partial days' absences but can see why some employers do it.

    Regarding the issue of whether or not you can dock salary for an exempt employee who has run out of accrued sick leave time, yes, you can.

    The Code of Federal Regulations, volume 29, Section 541.118(a)(3) clearly provides that the employer may dock the exempt employee's salary for any day he or she is absent due to illness or injury if employer has an actual compensation benefits in sick leave policy, practice or plan AND even if the exempt employee is not yet qualified to the benefits or has exhausted them.

    Kymm, since I am in California, I can tell you on this particular, last point, California law is NOT different than what is provided in the federal regulations.
  • >
    >Regarding the issue of whether or not you can dock salary for an
    >exempt employee who has run out of accrued sick leave time, yes, you
    >can.
    >
    >The Code of Federal Regulations, volume 29, Section 541.118(a)(3)
    >clearly provides that the employer may dock the exempt employee's
    >salary for any day he or she is absent due to illness or injury if
    >employer has an actual compensation benefits in sick leave policy,
    >practice or plan AND even if the exempt employee is not yet qualified
    >to the benefits or has exhausted them.

    . As long as the docking of the benefits doesn't impact the private sector exempt employee's salary for those partial days' absences, then under DOL's guidance, the private sector employer may do it. If there is no appropriate, available accrued time on the books to cover the partial day's absence then of course, it is still prohibited to dock for a partial day's absence

    Hatchetman: The top two paragraphs above you posted today. The last paragraph above is part of your post from 9/25. Aren't you contradicting yourself? Or are you talking in the first instance about whole days and the second, about part days?
  • Don, my 9-25 post paragraph refers to the emplyer's ability to deduct from accrued time balances of the exempt emplyee for partial days' absences. That's DOL's position because they don't see fringe benefits, such has a sick leave plan or policy, to be an issue for FLSA.

    The other two paragraphs reflect that the employer may dock full day's salary for an absence due to illness, even if there is no available sick leave pay because the employee is not yet eligible for it or has exhausted the benefit.

    I guess if the employer docks from the accrued sick leave time partial days' absences, while issuing the full salary, thus eventually exhausting them before a full sick day is taken, then the employer may dock the full day's absence due to illness from the week's salary without issuing any sick leave pay because it was exhausted by the docking for the partial day's absences earlier.
  • Thanks for the clarification. How much trouble would it be for you to fax a copy of that particular page in CFR (29), s541.118 (a)(3)to 601-939-6637?
  • Don, below is the specific wording of 541.118, including the subsection (a)(3):

    Sec. 541.118 Salary basis.

    (a) An employee will be considered to be paid "on a salary basis" within the meaning of the regulations if under his employment agreement he regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. Subject to the exceptions provided below, the employee must receive his full salary for any week in which he performs any work without regard to the number of days or hours worked. This policy is also subject to the general rule that an employee need not be paid for any workweek in which he performs no work.

    (1) An employee will not be considered to be "on a salary basis" if deductions from his predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. Accordingly, if the employee is ready, willing, and able to work, deductions may not be made for time when work is not available.

    (2) Deductions may be made, however, when the employee absents himself from work for a day or more for personal reasons, other than sickness or accident. Thus, if an employee is absent for a day or longer to handle personal affairs, his salaried status will not be affected if deductions are made from his salary for such absences.

    (3) Deductions may also be made for absences of a day or more occasioned by sickness or disability (including industrial accidents) if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by both sickness and disability. Thus, if the employer's particular plan, policy or practice provides compensation for such absences, deductions for absences of a day or longer because of sickness or disability may be made before an employee has qualified under such plan, policy or practice, and after he has exhausted his leave
    allowance thereunder. It is not required that the employee be paid any portion of his salary for such days or days for which he receives compensation for leave under such plan, policy or practice. Similarly, if the employer operates under a State sickness and disability insurance law, or a private sickness and disability insurance plan, deductions may be made for absences of a working day or longer if benefits are provided in accordance with the particular law or plan. In the case of an industrial accident, the "salary basis" requirement will be met if the employee is compensated for loss of salary in accordance with the applicable compensation law or the plan adopted by the employer,
    provided the employer also has some plan, policy or practice of providing compensation for sickness and disability other than that relating to industrial accidents.

    (4) Deductions may not be made for absences of an employee caused by jury duty, attendance as a witness, or temporary military leave. The employer may, however, offset any amounts received by an employee as jury or witness fees or military pay for a particular week against the salary due for that particular week without loss of the exemption.

    (5) Penalties imposed in good faith for infractions of safety rules of major significance will not affect the employee's salaried status. Safety rules of major significance include only those relating to the prevention of serious danger to the plant, or other employees, such as rules prohibiting smoking in explosive plants, oil refineries, and coal mines.

    (6) The effect of making a deduction which is not permitted under these interpretations will depend upon the facts in the particular case. Where deductions are generally made when there is no work available, it indicates that there was no intention to pay the employee on a salary basis. In such a case the exemption would not be applicable to him during the entire period when such deductions were being made. On the other hand, where a deduction not permitted by these interpretations is inadvertent, or is made for reasons other than lack of work, the exemption will not be considered to have been lost if the employer reimburses the employee for such deductions and promises to comply in the future.

    (b) Minimum guarantee plus extras. It should be noted that the salary may consist of a predetermined amount constituting all or part of the employee's compensation. In other words, additional compensation besides the salary is not inconsistent with the salary basis of payment. The requirement will be met, for example, by a branch manager who receives a salary of $155 or more a week and in addition, a commission of 1 percent of the branch sales. The requirement will also be met by a branch manager who receives a percentage of the sales or profits of the branch, if the employment arrangement also includes a guarantee of at least the minimum weekly salary (or the equivalent for a monthly or other period) required by the regulations. Another type of situation in which the requirement will be met is that of an employee paid on a daily or shift basis, if the employment arrangement includes a provision that the employee will receive not less than the amount specified in the regulations in any week in which the employee performs any work. Such arrangements are subject to the exceptions in paragraph (a) of this section. The test of payment on a salary basis will not be met, however, if the salary is divided into two parts for the purpose of circumventing the requirement of payment "on a salary basis." For example, a salary of $200 in each week in which any work is performed, and an additional $50 which is made subject to deductions which, are not permitted under paragraph (a) of this section.

    (c) Initial and terminal weeks. Failure to pay the full salary in the initial or terminal week of employment is not considered inconsistent with the salary basis of payment. In such weeks the payment of a proportionate part of the employee's salary for the time actually worked will meet the requirement. However, this should not be construed to mean that an employee is on a salary basis within the meaning of the regulations if he is employed occasionally for a few days and is paid a proportionate part of the weekly salary when so employed. Moreover, even payment of the full weekly salary under such circumstances would not meet the requirement, since casual or occasional employment for a few days at a time is inconsistent with employment on a salary basis within the meaning of the regulations.

    --------------------------------------------------------------------------------

    Below is the link to the FLSA regulations that are published in the Code of Federal Regulaitons,volume 29 if you want access to the entire set of regulations addressing exempt, non-exmept, work time, overtime, etc.

    [url]http://www.access.gpo.gov/nara/cfr/waisidx_98/29cfrv3_98.html[/url]
  • I see California mentioned frequently about. From the state regulation side, how does this play out with New Jersey law?
  • I am new to this formum and you seem to really know what you're talking about. Help me make sure I understand these laws. I am the HR Director for a bank. We have a formal sick leave policy wherein employees accrue sick days each year and can accrue them up to 65 days. First - Salaried exempt employees -- because we provide paid sick leave and have a policy, if they use up all paid leave and then get sick for part of a week, I can dock their pay. Right? We also have salaried non-exempt employees. I treat them the same way. The only exception if overtime issues. Our only hourly employees are part time employees. Anyone who is full time and eligible for benefits, are salaried. I also make salaried non exempt accountable for their sick leave, personal leave, etc. in hourly segments. Am I understanding this correctly?
  • Anapier, I'm not familiar with Lousiana wage and hour law, but I suspect it is the same as federal FLSA, or doesn't addres the specific issue your rasing (which means that FLSA regs would apply in Louisiana).

    FLSA reg 29CFR541.118(a)(3) do permit the employer to dock a full day's absence due to illness or injury even if the exempt employee has exhausted sick pay benefits.

    My 11-22-02 post to Don quotes the regulation extensively and includes that provision.

    Regarding the salaried, non-exempt employee, obviously 541.118 is not applicable to them.

    Salaried, non-exempts are addressed in the FLSA Reguations at 29CFR778.113 and .114, depending if your company set a salary for fixed hours of work or for fluctuating hours of work. On the face of it, since it is a salary, in either case, the amount of salary doesn't change simply because the emplyee was absent. The salary is set; what changes is the "hourly" rate that is paid if there needs to be some form of caluclation, as for overtime. Those fewer hours of work result in a higher rate of "hourly" pay for that week.

  • Great discussion. Hatchetman and Don D, you both are to be commended. I got several clarifications from you exchange.
  • The employee has to be off of work for a full week in order for you to be able to deduct a full week of pay. You cannot just deduct one day for sick if they exceeded there sick days. Refer to your disciplinary policy and advise them that they need to make up there time if it becomes excessive.

    If they keep missing hours a week due to appointments and such that can be rescheduled, unfortunately you need to start writing them up.
  • Hi Jennifer,

    Welcome to the forum.

    If you read post 17 from Hatchetman, subparagraph (3), you will see that you can in fact deduct a whole days pay from an exempt person if the conditions described are met.
  • Hey Marc. .thanks. .thought I was losing my mind. . again. .Leslie needs someone to jump out of a cake. .got plans tonight?
  • Sounds like fun. I think the temptation to eat my way out would be too much for a guy who has been off that stuff for several months - low carbs don't allow sugar.

    My wife has some friends in the Phoenix area that had one of these parties and arranged this with a moonlighting fireman. Apparently all the ladies were quite impressed. The bride went through with the wedding anyway, and I think the pictures were destroyed.

    It might be safer for all if you got Cole to come out of the cake.
  • Right! Exempt means there's a job to be done, not an amount of hours to be there. You cannot treat an exempt position with non-exempt rules only when it benefits the company to do so.

    Either pay them for all the hours they work or give them a salary for a job that requires their decision making and acceptance of a higher responsibility level.

    Like you, our company also gives sick leave in day increments but - an employee who works less than 3 hours on a normal workday will be charged a whole day's sick leave. An employee who works more than 4 hours but then leaves for the day, will be paid for the whole day without penalty.

    If the exempt person is a chronic abuser of the rules, working as little as possible and being gone often, one might need to address their future with the firm/company during a candid talk about their habits. But, you can't treat them as hourly unless you take away their status and reassign their duties to a non-exempt status.
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