Deduction for sick leave for exempt employee?
JudyRoy
42 Posts
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
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?
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!
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).
I have found that, in most cases, they shape up. Those that continue to have a poor attendance, then our disciplinary procedure eliminates them.
>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.
So if a salaried takes the day before thanksgiving off ...they worked Monday and Tuesday are they to be paid?
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?
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.
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.
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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]
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.
If they keep missing hours a week due to appointments and such that can be rescheduled, unfortunately you need to start writing them up.
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.
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.
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.