This month’s expert is
Laura E. Innes, an attorney with the law firm of Simpson, Garrity & Innes
in
As most employers know,
for employees to be exempt they must perform “exempt duties,” and you must pay
them on a salary basis. This means that an exempt employee generally must
receive his or her full salary for each week in which any work is performed— without
regard to the number of days or hours worked. But are employers required to
permit exempt employees to come and go as they please? Not according to a
recent opinion letter from the federal Department of Labor (DOL).1
Work Requirements Don’t
Put Exemption at Risk
The recent letter
responded to an employer who asked the DOL whether it could require: 1) certain
exempt employees to work 45 or 50 hours per week; and 2) exempt employees to
make up personal absences of less than one day. The employer said it wouldn’t
dock anyone’s salary for not meeting either requirement, but it would impose
discipline, up to and including discharge, for an employee’s consistent failure
to observe such requirements.
The DOL said that the
employer is free to implement the two proposed rules without losing the
employees’ exemption status, as the number of hours an exempt employee works is
a matter to be determined between the employer and the employee. Additionally,
employers may require exempt employees to record and track hours, work a
specified schedule, and make up work time lost due to personal absences of less
than a day without loss of the exemption.
The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.
When Salary Docking Is
OK
The DOL reminded the
employer that it may not dock exempt salaries for reasons other than these very
limited exceptions spelled out in the DOL’s salary-basis regulations: 1)
absences of full days for personal reasons; 2) absences of full days for
sickness or disability if an employee is compensated for such absence by a
sick/disability plan; 3) penalties imposed in good faith for infractions of
safety rules of major significance; 4) unpaid disciplinary suspensions of one
or more full days imposed in good faith for infractions of workplace conduct
rules; 5) partial weeks worked at the beginning or end of employment; and (6)
unpaid FMLA leave.
The DOL made clear that
an employee’s failure to make up time or work the required number of hours is
not a violation of a “workplace conduct rule” for which an employer may impose
a disciplinary suspension. And disciplinary suspension rules must apply to all
employees and pertain to workplace conduct, not performance or attendance
issues.
Tools You Can Use
Do you have any
financial recourse if an exempt employee comes to work for a few hours, then leaves
for personal business? Although not addressed in the recent opinion letter,
federal courts have held that you can require exempt employees to use vacation
and sick leave time in half-day increments as long as you don’t reduce pay.
That is, if an exempt employee takes a half day off, a half day of accrued
leave can be docked from the accrual bank—but not from the paycheck. Until
recently, the Labor Commissioner had prohibited
accrual bank for partial day absences. But last year, a California appeals
court ruled that California employers can dock salaried employees’ vacation
banks for a partial-day absence (meaning four or more hours in a single day) without
compromising the exemption status.2 However, if insufficient leave has accrued for a
partial-day absence, the employee’s actual paycheck must not be reduced for
that absence.
Based on the recent DOL
opinion letter and last year’s court decision,
tools for regulating the work hours of exempt employees. You can establish—and
enforce—rules regarding exempt employee work schedules, minimum hours, and
making up missed time, and you can dock leave accruals for half-day absences
due to illness or personal/ vacation time. But even with this new guidance from
the DOL and the
appeals court, complicated questions about exempt status may still arise. When
in doubt, consult employment law counsel.
_
1
Labor Opinion Letter FLSA2006-6
2 Conley v. Pacific Gas
and Electric Company,
Court of Appeals (Dist. 1) No. A105832, 2006