And for planned time off, be certain the employee understands no work is expected on the unpaid days. This means you cannot dock salary if an employee performs any work on the day in question.īefore making a deduction, make sure no work was performed. Deductions in pay for personal/sick time and unpaid disciplinary suspensions are permitted only in full-day increments (other than for FMLA). When it comes to salaried employees, it’s critical to check deductions carefully. (It’s OK to convert a salaried employee to an hourly basis during this time without destroying the person’s exempt status.) Proceed Carefully Before Cutting into Salary
It would be OK to pay him or her on a prorated basis only for the days worked in that week.)ħ) When an employee works a reduced or intermittent work schedule under the Family and Medical Leave Act (FMLA). (For example, if an employee resigns in the middle of a workweek. Beyond those offsets, however, deductions may not be made for absences caused by jury duty, attendance as a witness, or temporary military leave.ĥ) For unpaid disciplinary suspensions of one or more full days imposed in good faith for violations of workplace conduct rulesĦ) Deductions for partial weeks worked during the initial or final weeks of employment. If he or she misses a partial day, no deductions can be made.ģ) For penalties imposed in good faith for violations of safety rules of major significanceĤ) To offset any amounts an employee receives as jury or witness fees, or for military pay. Thus, if a salaried employee uses up all his PTO time and then misses work, you may deduct only in full-day increments. Note with #1 and #2: Under a written paid time off (PTO) policy, you can deduct time from the bank for partial days missed (e.g., in hourly increments), but not if it results in a reduction of pay. What IS legal, then? You can reduce an exempt employee’s salary only in limited circumstances, as follows:ġ) When an employee is absent from work for one or more full days (NOT partial days) for personal reasons other than sickness or accidentĢ) When an employee is absent for one or more full days, if your business has an established benefit plan that covers salary for absences due to personal reasons, sickness or accident, and the employee has exhausted his or her available paid time That can make your company liable for overtime pay, back taxes, and other penalties. If you do, the government assumes the employee should be paid on a non-exempt, hourly basis. So, it’s not legal to deduct an hour here or there when an exempt employee comes in late or goes to the dentist. This is because the salary of an exempt employee is not supposed to be based on hours, but rather on the value the employee brings to the business.
The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work.” And that’s how employers sometimes get into trouble: They improperly deduct money from an exempt worker’s paycheck.Īs a general rule, exempt employees must receive their full salaries for any week in which they perform work. Department of Labor (DOL), being paid on a salary basis means: “An employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. This article covers the more common situations - and what you should do to stay on the right side of the law.īut first … the law. And what about an employee “making up” time? There are specific guidelines surrounding pay deductions for salaried, exempt employees. Do you ever hit snags when handling time off for salaried employees? Perhaps you’re uncertain when you can dock pay - or if you should allow time-off requests for less than a full day.