I’ve been thinking a lot lately about what it means to be a salaried exempt employee. The classification is significant, because it enables an employer not to pay the employee overtime for an hours worked over 40 in week.
To qualify under most of the FLSA’s exemptions, the employee must be paid on a salary basis, which means that the exempt employee must receive his or her full salary for any week in which the employee performs any work, without regard to the number of days or hours worked. For this reason, the FLSA only permits an employer to take deductions from an exempt employee’s salary in very limited circumstances:
- For full workweeks in which the exempt employee performs no work.
- For an exempt employee who is absent for a full work day for personal reasons other than sickness or accident.
- For an exempt employee absent a day or more for sickness or disability, if the company maintains a plan that provides compensation for loss of salary caused by sickness and disability and the employee exhausted that leave.
- For penalties imposed for violation of safety rules of major significance.
- To offset any amounts received by an employee as jury or witness fees, or military pay.
- For unpaid disciplinary suspensions of one or more full work days for workplace conduct rule violations.
- For partial weeks worked during the initial or final weeks of employment.
- For an exempt employee working a reduced or intermittent work schedule under the Family and Medical Leave Act.
Otherwise, if an employer deducts pay from an exempt employee’s salary for time missed for any other reason, that deduction will cause the employer to lose the benefit of that employee’s exemption for that work week. Moreover, it will also cause the employer to lose the benefit of the exemption for any other employee working in the job classification for the same manager, regardless of whether any of those other employees also suffered improper deductions that week.
As Chris McKinney recently pointed out on his Texas Employment Law Blog, noticeably missing from any discussion of improper salary deductions is deductions from banks of paid time off. Indeed, the FLSA permits an employer to dock vacation time in any increment, and force a salaried exempt employee to use vacation or other paid time off to cover time away from work without jeopardizing that employee’s exempt status.
Perhaps the question employers should be considering, however, isn’t whether the FLSA permits deductions from an employee’s paid time off in increments of less than a full work day, but whether it makes sense to take those deductions at all. Above all else, being a salaried exempt employee means that you work until you get the job done. Some weeks it means that the employee works 40 hours, some weeks 60 hours, and some weeks even more. And, it also means that some weeks, the employee works less than 40 hours. If a salaried exempt employee is performing (that is, getting the job done in a timely and quality manner), then if that employee needs a few hours off to take a child to a doctor’s appointment, or a half-day to attend an event at a child’s school, do we really need to nickel-and-dime that employee over a few hours of PTO? Or, do we recognize the employee’s diligent performance, permit the time off, with the understanding that the time will be “made up” when the employee works to get the job done? You can can which option I prefer.