Benefits and Compensation

My Salaried Employee Has No PTO But Needs Time Off—What Can I Do?

Employers often find themselves in a conundrum, however, over how to handle miscellaneous time off that was never even requested as PTO. For example, what happens when the work hours are 8 a.m. to 5 p.m., but an employee has a personal appointment that requires him or her to arrive late? Usually this is not much of a question—that employee takes PTO for the time off and comes in as soon as possible and still receives a full salary for the week. But what if that employee doesn’t have any more PTO left to use? What if it’s not an appointment, it’s just a significantly late arrival time?

This is where it starts getting tricky and can quickly escalate. This scenario has multiple angles to consider:

  • What policies are in place to govern this situation? For example, does the employer have a policy delineating specific work hours that salaried employees must be present in the office?
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  • How are other employees treated? Employers need to be sure to treat employees consistently in regard to rule enforcement and disciplinary actions, including the use of PTO.
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  • What action can be taken? How can the employer curb this behavior? Docking pay? Discipline? Change in policy?

 

Here’s a deeper look at each of these aspects.

 
What Policies Are in Place? Are They Consistently Followed?

What policy is in question here? This is the first question that must be posed. In our scenario with the employee who shows up late, this is a critical question. Is there a policy against this? Or is arrival time merely a custom that most employees follow out of habit? If there is not a clear policy that has been broken when an employee shows up late, then the employer is more limited in what actions can be taken against the employee while still being fair. In the absence of a defined policy delineating work hours (and, ideally, a rationale for that policy that is consistent with business needs), there may be little action that an employer can take. The issue here is: What rule is being broken? (If there’s not a rule, should there be one?) What harm is being done? And are all employees being treated equally on this point?

This brings us to the next point: consistency. Even if there is a clear policy in place, it needs to be applied consistently. For example, if one employee routinely comes in a bit late but it’s overlooked but another comes in late and is disciplined, this could raise red flags. Another example might be when one employee is disciplined or otherwise negatively affected for needing to take time off after his or her PTO has run out, but another employee is not—even if it’s just an oversight. These scenarios could even lead to claims of discrimination. Discrimination can actually happen very easily and even without intent.

What Actions Can Be Taken to Curb This Behavior?

When faced with this situation, there are several actions an employer might take but be careful.

It’s easy to think that the lack of available PTO now means the employer should be able to reduce the employee’s pay, just as you would for an hourly employee who showed up late. But this just isn’t an option in most cases of salaried employees, primarily because reducing their pay could jeopardize their salaried status—and that status is a requirement for retaining their exemption from overtime regulations. If the employee is not paid on a salary basis and loses the exempt status, the employer can even be liable for overtime pay from the past. This is obviously not the route we want to take.

If deducting pay is not an option, what is?

Note: There are exceptions in which even an exempt employee can face a pay deduction, such as during FMLA leave and some other full-day absences as allowed by the FLSA. This article is only addressing absences of less than a full day.

  • First, if it is important for the employees to be in the office during consistent work hours, make sure that is explained in a written policy. If the policy does not yet exist, create it if this is critical to your business. Make it part of the employee handbook that must be acknowledged. Once a policy exists, enforce it consistently for all employees, using the disciplinary measures already in place with your disciplinary policy.
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  • Next, consistently enforce the PTO rules for all employees. If PTO must be taken for miscellaneous work time missed, such as when an employee must show up late for any reason, then it should always be enforced. Don’t fall into the trap of only enforcing it for the employees who request the time in advance; put a mechanism in place to ensure that PTO is deducted when it needs to be, even if it wasn’t previously requested. Alternatively, if PTO is not required to be taken in this case, don’t make the mistake of “punishing” one employee by deducting PTO for times it should not be required.
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  • Be sure that employees understand what other leave types are available to them. Don’t find yourself in a situation, for example, where an employee qualified for FMLA leave but never requested it because they were unaware of their options. It’s equally important to be sure to train supervisors to know what to look for—employees don’t always say “I need to take an FMLA leave of absence” or “I need a reasonable accommodation for my disability.”
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  • Be sure employees understand the consequences for absences beyond what the PTO policy (and other leave policies) grant. If the employee has exhausted all applicable leave options, it may mean they are subject to disciplinary measures, even up to termination when warranted. It might seem counterintuitive to think that it is acceptable to discipline and even terminate an employee for hours missed, even though it’s not permissible to deduct that same exempt employee’s wages. But this is the reality in many cases.
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  • Last but not least, some employers consider relaxing their policies instead. As a counterpoint to the options outlined above, another tactic would be to be more relaxed on situations in which salaried employees need flexibility in the specific hours they work, such as the ability to come in late on occasion or to leave for an appointment without utilizing PTO. The employers opt instead to focus on performance. There are a lot of benefits to this approach: it’s easier to enforce, employees are often happier, and the administration is simpler. The downside, of course, is the propensity for abuse and frustrations among employees who do not abuse the system; these negatives are what the actions above are trying to combat. And there is still a need for consistency in how employees are treated. It can be a tough balance, but many employers find that a more relaxed approach serves them well. Look at the big picture before making your decision.

Note: There are exceptions in which even an exempt employee can face a pay deduction, such as during FMLA leave and some other full-day absences as allowed by the FLSA. This article is only addressing absences of less than a full day.


About Bridget Miller:

Bridget Miller is a business consultant with a specialized MBA in International Economics and Management, which provides a unique perspective on business challenges. She’s been working in the corporate world for over 15 years, with experience across multiple diverse departments including HR, sales, marketing, IT, commercial development, and training.