['Compensation', 'Leave']
['Time off', 'Exemptions from Overtime/Minimum Wage']
04/30/2024
Copyright 2024 J. J. Keller & Associate, Inc. For re-use options please contact copyright@jjkeller.com or call 800-558-5011.
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Since vacation benefits are not required by law, employers generally have the right to manage these benefits as they deem necessary. This can include mandatory use of the time. For example, if you close your business for one day (perhaps the day before or after a holiday) you can require employees to use vacation for that day, regardless of whether they are exempt or non-exempt.
The federal rule for exempt employees says that salary deductions cannot be made for absences which are initiated by the employer. However, the federal rule also recognizes that employers can make deductions for accrued leave accounts, as long as the exempt employee still gets a full weekly salary. The was addressed by the Wage & Hour Division in an Opinion Letter (FLSA2005-7, Paid time off bank and 29 CFR 541.602) as follows:
"Where an employer has a benefits plan (e.g., vacation time, sick leave), it is permissible to substitute or reduce the accrued leave in the plan for the time an employee is absent from work, whether the absence is a partial day or a full day, without affecting the salary basis of payment, if the employee nevertheless receives in payment his or her guaranteed salary."
Another Opinion Letter (FLSA 2009-2, Mandatory use of vacation time and section 13(a)(1) salary basis) even clarifies that employers can require exempt employees to use vacation, even if the employee would prefer not to do so. This letter says that employers "may require exempt employees to use accrued vacation time for any absence, including one resulting from a plant shutdown, without affecting their exempt status, provided that employees receive a payment in an amount equal to their guaranteed salary."
Note that this "mandatory use" provision does not apply in California; exempt employees in that state cannot be required to use vacation for absences initiated by the employer. In essence, California says that exempt employees must be paid a full weekly salary for weeks that include mandatory absences, so forcing them to use vacation deprives them of the earned vacation time (i.e., they must be paid a full salary anyway, so they aren't really getting "paid" for the vacation hours).
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['Compensation', 'Leave']
['Time off', 'Exemptions from Overtime/Minimum Wage']
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Copyright 2024 J. J. Keller & Associate, Inc. For re-use options please contact copyright@jjkeller.com or call 800-558-5011.