Requiring Exempt Employees to Use Available Leave for Partial-Day Absences is Okay

By | August 7th, 2012 | General

The antiquated Fair Labor Standards Act (FLSA) has lots of potential pitfalls for employers. Perhaps that is why the estimated number of employers in violation of the act (70%) is so high. One potential pitfall is making improper deductions from an exempt employee (a person with a job that allows them to be exempt from the FLSA’s overtime and minimum wage provisions)’s salary. Most (but not all) exemptions require that you pay an exempt employee a set salary for any week in which the employee performs any work and there are very limited circumstances in which you can reduce an individual’s salary. Even where an exemption applies, the FLSA usually permits you to only deduct for full-day absences.

Which raises the common question of, what, if anything an employer can do for partial-day absences by exempt employees? The FLSA prohibits an employer from reducing their salary, but it does not prohibit an employer from requiring an employee use any and all available paid leave to cover the absence. Why? Because an employer isn’t required to give employees any paid leave to begin with, so an employer can restrict or require its use in most any way it wants (obviously there are some exceptions, such as for jury duty leave, etc.).

In a case decided yesterday by the Tenth Circuit Court of Appeals, an employee challenged her employer’s requirement to use her available paid time off for partial-day absences. She claimed that, as an exempt employee, the deductions from her leave bank violated the FLSA. The Court disagreed, reaffirming that the FLSA is only concerned with policies and/or practices that actually reduce an exempt employee’s salary, not the amount of available leave. Here, the employer did not have a policy or practice that indicated that the employee’s salary would be reduced in these circumstances (even if there was no paid leave available), so the employer won summary judgment on the FLSA claim.

Employers should exercise caution and always seek advice from an employment attorney before they deduct anything from the salary of an employee who they have classified as exempt (this includes deductions for absences, lost or damaged equipment, etc.). If you have a question about how to classify employees as exempt/non-exempt and/or the rules governing exemptions (including when you can deduct from an employee’s salary), contact the Employers Legal Resource Center at 405-702-9797.

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