In an age of unending crises and disruptions, finding ways to accommodate absent workers is a high priority for employers. Especially for well-paid, salaried employers, employers want to present an image of compassion – that they care about employees’ well-being. Paid-time off (PTO) is one common way of accomplishing this – employees get a specific number of days off with full pay, usually growing over time to encourage them to keep working. Policing PTO seems simple: employees can only take off the number of days they have, and so if they don’t show up they’re absent from work.
But what happens when an employee with no remaining PTO exempts himself or herself from the rules? The employer can always fire the employee – but employers rightly hesitate to fire key employees simply because of one absence. Applying a PTO deficit to an employee doesn’t help – if the employee already took PTO without having any, taking more PTO against a negative balance is the next logical step. So is there any way an employer can avoid either of these extremes?
FLSA Exemptions: No Half-Days!
Unfortunately, the answer is generally “no.” Under the Fair Labor Standards Act (FLSA), employees are either “exempt” or “nonexempt.” “Exempt” employees are those paid on a “salary basis” – where they get paid the same amount per week, no matter how much (or how little) work they perform. This means that employers usually cannot deduct the pay of salaried employees for skipping work days – only for entire weeks at a time. So employers can’t “claw back” salaried employees’ pay for less than a full week of absences (except for a few situations covered later on in this article).
On the other hand, “nonexempt” employees – those paid hourly or below a certain pay threshold (currently $684/week) – can have their pay reduced for days they don’t work. But such “nonexempt” employees are entitled to overtime under the FLSA. That overtime means employees who work more than 40 hours in a week are paid one-and-one half times their regular pay rate – not the minimum wage. So claiming that a salaried employee was really “nonexempt” to claw back a day’s worth of pay is rarely worth it – over the course of a year, that employee can accrue weeks’ worth of overtime.
What Options Do You Have?
There are a couple of exceptions that can help resolve this problem in some limited circumstances. Employers can deduct pay where employees are absent for full days (only) if the employee is absent for personal reasons other than sickness or disability. Employers can also deduct pay (again for full days only) where the employer has a bona fide compensation plan for disability or sickness. Finally, employers can deduct days not worked in the first or last week of an employee’s employment. Except where an employee is taking unpaid medical leave (under the Family and Medical Leave Act), deducting pay for partial days off is never permitted.
All of this matters because employers who improperly deduct their salaried employees’ pay face substantial legal problems. Federal regulations hold that an employer’s actual practice of improper deductions means that the employer didn’t intend to pay its employees on a salary basis. That means that an employer isn’t just responsible for repaying the wrongful deduction – but has to pay that employee overtime for the entire period this occurred. And it’s not just that employee, but any other employee who worked in the same job for the same manager during that time period. If you’re a small business, that means every one of your exempt, salaried employees could suddenly become eligible for overtime pay. If your employees are abusing their PTO rights to avoid work, firing them may be the least painful option – because deducting pay to “compensate” is usually not a workable option.