Partial Day Deductions for Exempts in AZ

HRQ

In AZ, under the 9th Circuit, it is permissible to replace a partial day's salary with vacation or sick pay (PTO for us). In the past, we haven't practiced this, but intend to begin. We'd like to require use of PTO only when an Exempt works less than 4 hours in a day, so we don't "punish" those who are lucky enough to occasionally leave an hour or two early.

I need to write a policy to announce this. Does anyone already have a written policy for partial day deductions or have any suggestions?

I started writing mine and realized how many things I could do wrong... Am I destroying the Exempt status by assigning hourly requirements? (i.e. < or > 4 hours) :-S

Hatchetman

[font size="1" color="#FF0000"]LAST EDITED ON 06-19-03 AT 01:29AM (CST)[/font][p]As has been discussed here and elsewhere, US DOL Opinion does permit the charging of an exempt employee's hours balances for partial days' absences without jeopardizing the salaried status AS LONG AS the full day's salay is paid. This includes when the employee has exhausted the time balance or is not yet eligible to them.

You policy needs to make sure that latter point is covered.

I am not familiar with Arizona wage and hour law and what provisions it has on vacation and PTO accruals and "use-it-or-lose-it" employer policies. But if Arizona prohibits such policies (as California does) by requiring the employer to pay out all accrued but unused vacation, PTO and/or sick leave time when the employee terminates employment, then a policy permitting the charging of an exempt's accrued time balances for partial days' absences would probably be illegal.

You mentioned the 9th Circuit. The Court addressed in part this issue as a side matter in the Abshire v. Kern County case affecting the exempt status of public sector emplyees (I am one in California) some 10 years ago byindicating such dedcutions would affect the salaried status. But within a year, the Court reversed itself in another public sector case (the "City of Novato" case), by holding that accrued time balances under FLSA were not compensation and therefore such deductions were permissible without jeopardizing the salaried status. California law establishes that paid vacation time and unspecified PTO are deferred compensation once vested to the employee in California (but not paid sick time) and therefore cannot be used in the manner indicated by DOL and the 9th Circuit. You should make sure, as I said, what Arizona law holds.

To answer your question, I don't think so under FLSA merely by setting the time limit at which point the balances will be charged. As I said, DOL does not see accrued time balances as compensation and therefore as long as the exempt employee doesn't get docked pay, how the employer handles the balances appears ot be strictly an employer decision (absent any other legal requirment or collective bargaining contract).

HRQ

Hatchetman, I meant to say thanks for your detailed post, then realized I never said it. Wage & Hour seems to be your area of expertise!

So.... Thanks! It helped.