Question: Under what circumstances is an employer allowed to require a salaried exempt employee to utilize his/her vacation leave bank for full days away from the office for personal reasons other than medical? Also, is an employer allowed to withhold payment or “dock” a salary-exempt employee for full days out of the office for personal reasons other than medical once he/she has utilized his/her entire vacation leave bank balance?”
Answer from the experts at HR.BLR.com:
Under the Fair Labor Standards Act (FLSA), an exempt employee must receive his or her full salary for any week in which he or she performs any work, without regard to the number of days or hours worked. The amount paid cannot be reduced because of a variation in the quality or quantity of the work performed.
However, a salaried employee need not be paid for any workweek in which he or she performs no work at all. Docking an exempt employee’s salary for a partial workday is risky because it can jeopardize an employee’s exempt status and may render the employer liable for overtime pay.
That being said, deductions are allowed, but only in limited circumstances. In regards to your specific question(s), you refer to “full day” absences for non-medical, “personal reasons.” In this type of situation, federal law provides that an exempt employee’s pay may be docked for absences of a full day or more for personal reasons other than sickness or disability.
Thus, if an employee is absent for a day or longer to handle personal affairs, his or her salaried status will not be affected if deductions are made from his or her salary for such absences. If an employee is absent for less than a day, he or she must be paid for the full day.
It is important to note that employers may deduct from an employee’s allotted personal time under the company’s leave plan in increments of less than a day. The employer simply may not deduct an employee’s pay for less than a day’s absence.
The FLSA does not require employer-provided vacation time. If an employer offers his or her employees some number of days to be used for personal absences, for example PTO or vacation, taking deductions from an exempt employee’s accrued leave account to cover an absence subject to the policy (in any amount, including partial days) does not violate the salary basis of payment.
Other permissible deductions from the weekly salary of exempt employees include:
- A day or more for major safety violations;
- For full days of sickness or disability if the deductions are made under a bona fide plan, policy, or practice of providing compensation for loss of salary caused by sickness and disability;
- To offset amounts employees receive as jury or witness fees, or for military pay;
- First and last week of employment. An exempt employee’s salary may be docked during the first and last week of employment if the employee works less than a full workweek. Payment of a proportional amount of the employee’s salary for the time actually worked meets the salary pay requirement for those weeks;
- For unpaid leave taken under the Family and Medical Leave Act, and
- Employers may impose unpaid disciplinary suspensions of one or more full days for violations of written, publicized workplace conduct rule. See 29 C.F.R. §541.602
Remember, the FLSA does not regulate vacation, severance, sick and holiday pay, or rest and meal times. Most of these are a matter of company policy and should be enforced in a nondiscriminatory manner. As a general rule, employers should err on the side of caution when it comes to deducting from exempt personnel.