paid time off for salaried exempt....

Lola815 · April 2004

I have a question that has probably been discussed before, so if there is a thread please direct me to it.

Anyway, normally what we do when an exempt, salaried employee wants a few hours off we deduct that time off from their vacation, sick, or personal bank. If they want a full day off, we also deduct from their bank an 8 hour day. Lately the majority of the exempt, salaried employees will say that they worked extra hours during the week so they won't have to use their time off from their bank. It this ok? I totally understand deducting from the paycheck rule, I just don't understand deducting from PTO. Does the DOL have rules? What are your company policies regarding this? We don't have a policy and I would really like one in place. Thanks!

Hatchetman · April 2004

[font size="1" color="#FF0000"]LAST EDITED ON 04-20-04 AT 11:42AM (CST)[/font][br][br]DOL has issued formal Opinion letters over the years that do permit an emplyer to charge the hours missed in a salaried, exempt's partial day's absence against his or her accrued time benefits. But in all cases (except for reduced FMLA or in the public sector), the employer MUST ALWAYS pay the full day's salary even if there is no accrued time left on the books.

However, in some states, state wage and hour laws or regulations may prohibit the employer from charging the accrued time bank for the hours missed in a partial day's absence -- thus the employer still has to pay the missed hours as part of the day's salary but doesn't recoup the loss.

Regarding a salaried exempt employee's ability to earn overtime, even on a comp time basis, again, formal DOL Opinion over the years has permitted that to occur. As long as the employer is not using the payment or accrual of overtime as a rouse to get around the the prohibitions against improper docking in 29CFR541.118(a), the DOL has no problem with the employer having a policy or practice of a salaried exempt earning overtime -- cash or comp time (working beyond what the weekly salary is intended to cover) -- even on an hourly basis.

What your employees are asking is up to what your company wants to do. FLSA doesn't require any charging of accrued time banks for partial days'a bsences or the payment of overtime in the situation you describe, but only permits it with proper safeguards. State law may prohibit one or both practices.

GANDA · May 2004

I work in California and this topic is coming up more and more. From what I've learned, an employer cannot deduct or allow an exempt employee to use accrued vacation time for amounts less than a day in duration. I've come to this very solid fact after talking to several lawyers and a labor deputy commissioner. This means that an employer cannot deduct vacation for amounts less than a day, nor can they allow an employee to put less than a day of vacation on their timesheet if they are exempt. This kind of leaves us in a lousy situation. On the one hand, as employers we want a full accounting of all hours that were paid. On the other hand, the entire basis of making an employee exempt is that they are paid for the job they do, not the hours they work. But to be realistic, managers want their employees to work at least 8 hours a day. So at this point, my company is at a bit of an impasse. We almost cannot track daily hour totals of employees because we risk jeopardizing their exempt status, but we cannot accurately keep tabs on where our employees are otherwise.

Has anyone dealt with this situation and come to a legal and effective solution? If so please let me know. This is probably the most pressing concern for our company at this point in time. Basically, we want to be able to allow employees to take a few hours of vacation if they go watch their kids play soccer or something. But we can't find a legal way to do so without either forcing them to take an entire day off, or just allowing them to work less than 8 hours in a day or 40 in a week.

Gillian3 · May 2004

Yes, there is a legal way. Recognize that one of the benefits (?) of being exempt is to be worked to the bone at times to get the job done, but that if it can be done in less than 40 every once in a while, let the employee go to the soccer game and forget calculating the hours - it's compensation for being worked to the bone. If an employee is getting their job done in less than 40 hours on a consistent basis you are paying full time wages for a part time job and that can be fixed by changing the salary. It's not a big deal.

GANDA · May 2004

Thanks for the answer Gillian. I guess what I will have to convince upper management that tracking everyone's hours on a pay period basis is a concept that needs to be thrown out. I do know that paying an exempt person is based on work, not hours. It's just an embedded system here. In order to make a change in policy, I will have to convince them to change the way that they look at exempt employees. And of course changing the hearts and minds of people who have been doing something one way for decades is not always very easy. But your answer seems to resonate with what the law suggests, in addition to what I've found on other HR sites and at seminars.

M in AZ · May 2004

As was indicated in an earlier response - exempt employees can also put in long hours - with no renumeration back in overtime. It is suppose to be a win win siutation for all involved - not just the employer. If the employer feels the personnel diserves to be "exempt" - hopefully the employee and employer are both professional enough to know getting the job done is the 1st priority, and the employee will not take advantage of the situation. If that is not the case, perhaps the employee needs to be reevaluated. It seems employers want to quickly classify "exempt" - so they don't have to pay overtime, but get upset if the employee asks for some time off. That is why there are so many laws - keeping us all confused.

Hatchetman · May 2004

Ganda, the prohibition against charging accrued paid PTO, vacation or other unspecified time bank (one not designated for a particular reason) for partial days' absences is applicablee in California, particularly, and a couple of other states but not in most (most states go along with DOL's Opinion).

Nothing in California wage and hour law and notihing in DOL/FLSA specifically prohibits an emplyer from tracking time of a salaried exempt at the expense of jeopardizing the exempt status. In fact, it is acknowledged that it is understandable that an emplyer dothat in svairous situations (such as for billing). An emplyer can track for disciplinary reasons. The only thing the employer may NOT do is to pay the weekly base salary on the amount of hours worked (except for intermittent FMLA leave or public sector). Ovetime may be issed thhoug that could be paid on an hourly basis for the salaried exmept working more hours that the salary is intended to cover. Thus an salaried exempt who leaves early or comes in late can be disciplined; but he or she mayy not have salary docked because of tardiness or leaving early.

However, one consideration should be noted. The more steps the an emplyer takes to make a salaired exempt look like a non-exemnpt or appear to be paid on an hourly basis, the more likely it is that DOL or the State Laobr Commissioner will consider the positin to be non-exempt and the emplyer's tracking or improperly docking pay or doing other things along that line could be used as proof on intention if the emplyer does wind up even accidentally to pay the exempt's based salary on an hourly basis.

Rockie · May 2004

Ganda: As you can see, there are many opinions and variations on this. Because of this and the fact that these things are open to being tested in court and the halls of the DOL, we decided not to dock salaried employees for absences of less than a day...if they take an entire day off...it is counted as PTO time. Most of our salaried employees work far more than 40 hours and from a fairness standpoint, an occasional few hours here and there is not something we would want to dock them for.

As always, this is open to abuse from a few, but by and large, you usually get much more than 40 hours from a salaried individual.

paid time off for salaried exempt....

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