Exempt ee using vacation and sick pay when off work

sherrymiller

When an exempt employee takes time off work, either partial or full days, can I substitute sick or vacation pay for the time off? What happens if the exempt employee no longer has sick or vacation pay accrued?

Does the company have to have a "formal paid time off bank" to do this?

Thanks for your help!

Pork

Our computer payroll computer does not keep track of sick and vacation time for EXEMPT employees. We keep the information manually and we take sick time and vacation time, whenever it is brought to our attention. Our computer automatically produces a weekly paycheck unless we default the system and make a manual adjustment. As the HR, we do not police EXEMPT time/days/nor hours, the manager/supervisor/department heads are responsible for the comings and goings of their EXEMPT employees. So, unless someone in charge tells us that someone was off last Friday, we and the computer are blind to the event and the emploee receives his/her paycheck, accordingly.

When the EXEMPT employee leaves our employment he/she will receive a cash payment for all sick and vacation time accurred. The expense is charged to each department budget and obligations. When it starts to present a problem to the company, the responsible "head" will start to controlling his/her EXEMPTS!!!!

PORK

njjel

It is my understanding that there must be a company policy establishing paid time off i.e. - so many sick days, so many vacation days, etc. and that in that case the employer may charge the exempt's "bank" for the time they are off. When the bank is depleted however the employee must be paid for the day if they work any part of the day, but can be "docked" for a full day's absence.

Shadowfax

Take a look at Hatchetman's postings under 'exempt' about halfway down this forum and you will get a succinct overview. Generally, if exemt works during the week thety get full week pay. Daily docking, full or partial must meet some exception.

Hatchetman

[font size="1" color="#FF0000"]LAST EDITED ON 08-07-03 AT 10:01AM (CST)[/font][p]>When an exempt employee takes time off work, either partial or full
>days, can I substitute sick or vacation pay for the time off? What
>happens if the exempt employee no longer has sick or vacation pay
>accrued?

>Does the company have to have a "formal paid time off bank" to do
>this?

I assume this is not a public sector employee or the employee is not taking FMLA leave.

Outside of those two circumstances, you may NOT dock an exempt employee's salary, except for full days' absences due to personal reasons (which means any non-illness or non-injury caused absence) and for full days' absences due to illness or injury.

For full days' absences due to personal reasons, there is no requirement for there to be a pay mechnism such as paid vacation time or PTO to cover the docked pay. Some absences, such as for jury duty and temporary military leave, however, may not be docked (although any pay the employee recieves for these situations may be used to offset the employee's salary paid during those absences).

On the other hand, you may only dock the salary for a full day's absence due to illness or injury IF there is a bona fide sick leave compensation mechanism that will provide full pay for that day. The mechanism can be accrued paid sick time or PTO, or some form of insurance policy or other mechanism that the employer provides to achieve that purpose. Further, the employee only needs to be subject to the policy or accrued time. Ineligiblity because, for example, the employee has NOT worked sufficient time yet to earn the benefits, or the employee has exhausted the benefits, still allows the dock to be made. Obviously, if there is no such sick pay mechanism, then the salary may not be docked for full day's absence due to illness or injury.

Although not specifically stated in FLSA, the US Department of Labor has consistently ruled that PTO, paid vacation time and accrued sick pay benefits, are fringe benefits and not subject to FLSA. Thus, it permits employers to charge the accrued benefit times for partial day's absences due to personal reasons or illness or injury without jeopardizing the employee's exempt status. The employee mus , however, still be paid the full salary for the day, if any part of the day is worked. Thus, if the emplyee has exhausted the benefits, then the full salary still has to be paid.

Having said that, you should be aware that in some states, charging paid vacation time or PTO for partial days' absences (or perhaps even accrued paid sick leave time) MAY NOT be permitted. You would need to check your state's wage and hour laws on that. For example, California does not permit charging unpsecified PTO and accrued paid vacation time for partial day's absences, although it does not prohibit it for paid sick leave time.

Take a look at the FLSA regulations at the Code of Federal Regulations, volume 29, section 541.118(a).

The link is:
[url]http://www.access.gpo.gov/nara/cfr/waisidx_02/29cfr541_02.html[/url]

Scroll down to 541.118.