Deducting Exempt Employees Pay
Lori1
29 Posts
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
Comments
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