It’s “What’s Up? Wednesday”. Time to talk about EXEMPT PAY . . .

You asked: “Can employers deduct from exempt employees’ weekly salary if they run out of sick time? And do they have to be paid if the office is closed for inclement weather?”

Alex answers:

According to the Federal Labor Standards Act (FLSA), if an exempt (“salaried”) employee performs any work during a given workweek, he/she must be paid his/her full salary for that week. Of course there are a few exceptions. These include (but are not limited to ) an absence due to personal reasons; a suspension due to a violation of safety or conduct rules; the first or last week or employment; or when the employee is on a medical leave under the Family Medical Leave Act (FMLA).

As we’ve seen across the United States this winter, the weather can lead to emergency closures for businesses. Keep in mind that if you are forced to close temporarily due to inclement weather, under no circumstances can exempt employees go unpaid. The same rule applies if the exempt employee is out for jury duty. They must not go unpaid.

Time out due to illness for an exempt (“salaried”) employee is a little trickier to navigate.  Generally, the exempt employee must be paid for all absences due to his/her own illness. However, the employer can certainly require the employee to use paid time off (sick, vacation or personal time). In the event that the employee has run out of paid time off or is not yet eligible for it, they must be paid for the days off UNLESS the employer has a bona fide sick leave plan. A bona fide sick leave plan is a plan or policy that has defined sick leave benefits that have been communicated to all employees and is administered impartially. This plan must also allow for a “reasonable” amount of paid sick days for exempt employees. There is no clear definition of “reasonable,” but generally the Department of Labor has considered a minimum of five (5) days of paid sick time off to be acceptable.

In a nutshell, for those employers who do not have a defined, written sick time or paid time off (PTO) policy, you’re going to have to pay exempt employees for all sick days, even if you have given employees sick days and they exhausted them. You can get around this by implementing a defined, clear policy that allows exempt employees at least five days of paid sick time off in a given year.

And finally, keep in mind that if an exempt employee comes into work for a portion of the day (even if it is just 10 minutes) he/she must get paid for the entire day.  It must be a FULL day absence to dock exempt employees pay, even with a bona fide sick leave plan.  Exempt employees get paid full day salary for even small amount of work in a given day.

Last, but not least, none of what is explained above applies to non-exempt (“hourly”) employees . . . they are easier to handle. Simply put, you are only obligated to pay a non-exempt employee for the time that they actually work.

If you have any other questions about employee classifications, send them to hrhelpline@eastcoastrm.com.

Disclaimer: The information provided on this web site is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this web site does not create an attorney-client relationship between East Coast Risk Management or our employment attorney and the user or browser.

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