Deducting Exempt Employees Pay

I am in the process of re-doing the Employee Handbook for my employer. One of the provisions he asked for, was to limit the number of days a salaried employee could be out (he said 5) during the year. Once the salaried employee had reached their 5 days, he wants me to start deducting their salary for their time out. I am not sure if this is legal or not. Can anyone help. Thanks

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  • This has been an issue that has been addressed before but my understanding of the FLSA is that you cannot deduct from an exempt employee's pay but for a couple of circumstances - 1) use of FMLA time, 2) absences of a full day for "personal reasons". 3) suspensions of an entire week. My feelings regarding exempt employee's has been that you are hiring them to do a job, regardless of the amount of time it takes them to do it. You, as an employer, are getting the benefit of this employee working (usually) consistently more than 40 hours and not having to pay them overtime. Treat them as the professionals that they are and allow them some flexibility. If their attendance starts to affect their ability to get the job done, deal with it on a disciplinary level.
  • Hi Lori, I found your question and the replies very interesting. Here at my company, we accrue personal, sick and vacation time. Our exempt employees are made to use one of them for any time off whether it be 1 hour or 1 day. When questioned about this, the explanation was that as "working" exempt employees, that also supervise more than 1 non exempt worker, they are allowed to deduct any absenses from the accrued benefits. One exempt employee has been paid overtime as well. I will remain confused for ever on this issue. And who dares to go to DOL for answers?
  • Lori1: Get you a copy of the FLSA Regulations Part 785: and Part 778 read them and high light certain works within because it will come up often. it is against Federal Law and in some states their laws as well. My copies are well read and book marked with special notes and I am a real hero when some manager whispers in my ear and says "can I do this or that?" I whip out my booklet and turn to his area of interest and say "No", but now let me see what we can do to get to what you want! TELL ME MORE! I can usually figure out some thing we can do or flat thank him for allowing me to keep in out of the courts. My positive approach has gotten me many subjective bonus $ollars! Pork
  • [font size="1" color="#FF0000"]LAST EDITED ON 02-26-03 AT 06:48PM (CST)[/font][p]Lori, are these exempt salaried, or the rare, non-exempt, salaried? There is a difference.

    Also, what happens within those five days? Is there some type of compensation that occurs if the employee is out? What are the requirements for the absence to be paid (illness, vacation, perosnal time, all, what?) Or, is this just treating the emplyee as if he or she were at work for those first five days of absence during the year?

    Assuming these are exempt, salaried that you are being asked to address, FLSA regulation (29CFR541.118) provide guidance on what may be docked or not docked. Your state law may also have some provisions on this for exempts.

    As Linda noted there are specific reasons that allow you dto dock an exempt emplyee's weekly salary. These are specified in the regulation 541.118a.

    An employee may have the full day's absence docked from the weekly salary when the absence is due to the employee's sickness or disability (including industrial injury), PROVIDING that employer has a plan, practice or policy that compensates the employee for that absence. This could be an STD policy or accrued sick time or anything else. If the employee runs out of the sick time or STD benefits or is not yet eligible to them, the weekly salary may still be docked for the full day's absence. However, if the employer has NO such compensation mechanism for full sick days, then docking the salary is not allowed for a full day's absence due to sickness or disability.

    This is why it's important to know what happens with those first five days.
    If the employer is just paying the employee as if he or she were working when in fact the employee is out ill and then stops that practice after the five days, I don't believe that would be considered proper. The US DOL would probably see that as a subtrefuge to get around having to pay the salary because it had no compensation mechanism for sick days.

    An exempt employee may have the full day's absence docked from salary when the absence is for personal reasons. There is no requirement for there to be a compensation mechanism as there is for sick days. Thus, if the employee is not absent the full day because of illness or disability, but is absent because he or she is on vacation, going shopping, off for religious reasons, etc., then the employer may dock that full day's salary. Whether you then pay the employee some type of accrued time benefit, such as paid personal time or PTO, or paid vacation time, is a different issue.

    Docking of salary during the week may occur when there is a disciplinary action, i.e., a suspension without pay, due to the employee's violation of a major SAFETY rule (e.g., smoking in the dynamite room).

    You may dock the full weeks's salary if and when the employee performs no work at all during the week.

    As Linda pointed out, FMLA allows for partial day's docking of the salary when the exempt employee is on intermittent or reduced FMLA leave without jeopardizing the exempt status.

    So, the issue you need to work out with your boss is exactly what happens with the absences. What the first five days are suppose to represent? Make sure whatever occurs with docking is consistent with the regulation 541.118(a).

    See the Code of Federal Regulations, voume 29, Section 541.118

    [url]http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=29&PART=541&SECTION=118&YEAR=1998&TYPE=TEXT[/url]

    I hope these employees are, in fact, exempt. Otherwise, I just spun my wheels. #-o
  • [font size="1" color="#FF0000"]LAST EDITED ON 02-27-03 AT 02:24PM (CST)[/font][p]I would like to thank all of you for responding to my question. Your responses were very helpful. The position is exempt and the company does not provide personal days or sick days to any of its employees. Hourly employees cannot use a vacation day if they are out sick; they have to take the time unpaid. Exempt employees do not have any sick or personal time benefits either. The exempt employees are paid whether they are here or not, no matter what the circumstances are. The problem is some of the exempt employees take advantage of this and take several days off during the course of the year, well in excess of the recommended 5 days. But I do believe that all of you have answered my question, unless there is something I have missed. Thanks once again to all.
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