Deducting pay for intermittent non-FMLA leave
Denise was enjoying an afternoon cup of coffee, when Tony came to her and asked about taking leave on an intermittent basis to care for his mother. Denise knew the absence would likely qualify for FMLA protections, but she wondered if Tony’s pay could be docked for such intermittent absences, particularly since Tony was an exempt employee.
The FMLA and the FLSA
As we all know, the FMLA does not exist in a vacuum. Other laws interact with and bump into it. One of those laws is the Fair Labor Standards Act (FLSA). The FLSA requires employers to pay exempt employees on a salary basis — they receive the same pay no matter how many hours they work in a week or the quality of their work. The FMLA, however, allows a special exception regarding salary deductions. When exempt employees take intermittent FMLA leave, employers may deduct from their pay.
In short, you may make deductions from an employee’s salary for any hours taken as intermittent or reduced FMLA leave within a workweek, without affecting the employee’s exempt status.
You may pay a proportionate part of employees’ full salary for time actually worked. If, for example, an exempt employee who normally works 40 hours per week uses four hours of unpaid leave under the FMLA, you may deduct 10 percent of the exempt employee’s normal salary for that week.
You may convert an exempt employee to a nonexempt (hourly) position during a period of intermittent or reduced schedule FMLA leave. Determining the hourly rate could have some challenges, as you might not know how many hours the employee normally works. This is where having a written agreement regarding an employee’s normal work schedule comes in handy. You need to have something supporting the rationale behind the hourly rate determination.
Between converting an employee to hourly or docking the exempt employee’s pay, the latter is usually preferable. Of course, you are not mandated to dock an employee’s pay or move them to hourly; you may choose to continue to pay them their full salary while on intermittent FMLA leave.
If Denise’s company wasn’t covered by the FMLA, the FMLA would not apply, so the interaction between the FMLA and the FLSA likely does not, either. Therefore, the special exception would probably not apply, and making such deductions could risk the employee’s exempt status.
If, however, an employee takes non-FMLA leave in full-weeks, then you need not pay that employee for that week. Deductions from an exempt employee’s salary may also be made for absences of one or more full days of sickness or disability (including work-related accidents) if the deduction is made according to a bona fide plan, policy, or practice of providing compensation for loss of salary. Deductions for full-day absences also may be made before the employee has qualified under the plan, policy, or practice, and after the employee has exhausted the leave allowance.
Pay deductions for exempt employees must be considered carefully, based on all the facts involved, including the FMLA’s application.
