Employment: FLSA Exemptions - Part II - Be Wary of Deductions

12.01.10

Generally, as we pointed out last month, employers may not make deductions from the pay of exempt employees without risking the loss of the overtime exemption. There are, however, a limited number of exceptions to the rule.

An employer is not required to pay the full salary of an exempt employee in the initial and terminal weeks of employment. In addition, deductions from pay may be taken when an exempt employee has performed no work in a work week.

Deductions may be made when an exempt employee is absent from work for one or more full days for personal reasons other than sickness or disability. For example, if an employee is absent from work for two full days to handle personal affairs, the employee's salaried status will not be affected if deductions are made from the salary for two full-day absences. But, if an exempt employee is absent for one and a half days for personal reasons, the employer can only deduct for the full day absence. If an employer has a personal time off policy, the employer may deduct full or partial days from the leave bank when an employee is absent for personal reasons. If the employee has exhausted his or her personal days off, however, only full days can be docked from the employee's salary.

Deductions from pay may also be made for absences of one or more full days due to sickness or disability, including on the job injuries, if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by such sickness or disability. For example, when an employer has a sick leave plan, but the employee has used all available sick days, or has not worked for the employer long enough to qualify for sick leave, the employer can deduct full days of work missed. You may not deduct for partial day absences from pay, but you may deduct partial days from a sick leave bank. There is no requirement that the employer must pay any portion of the employee's salary for full-day absences for which the employee receives compensation under the sick leave policy, plan or practice.

An employer can deduct from the pay of exempt employees for unpaid disciplinary suspensions of one or more full days, if imposed in good faith, for infractions of workplace conduct rules. The suspension, however, must be imposed pursuant to a written policy applicable to all employees. An employer can also deduct from the pay of exempt employees for penalties, imposed in good faith, for infractions of safety rules of major significance.

An employer is not required to pay the full salary of an exempt employee for weeks in which the employee takes unpaid leave under the Family and Medical Leave Act, and may deduct from an employee's salary for partial day absences if such absences constitute intermittent or reduced leave under the FMLA.

Next month we will look at the remedies and penalties available for improper deductions.

By Rebecca M. Fowler rfowler@dsda.com

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Rebecca D. Bullard

Rebecca D. Bullard

Rebecca represents clients primarily in labor and employment litigation and counsels clients regarding everyday employment matters. 

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