['Wage and Hour', 'Compensation']
['Salary deductions', 'Exemptions from Overtime/Minimum Wage']
04/30/2024
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Exempt employees must be paid on a salary basis, which means the weekly salary cannot be subject to deductions based on the quantity or quality of work performed. Certain deductions are allowed for absences which are initiated by the employee (such as personal/vacation days and sick days, with some restrictions). However, salary deductions are rarely allowed for absences initiated by the employer (such as company closings, including holidays). The salary basis rule (541.602) literally says:
"An employee is not paid on a salary basis if deductions from the employee's predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. If the employee is ready, willing and able to work, deductions may not be made for time when work is not available."
Federal law does allow for unpaid disciplinary suspensions of one or more days, but only under a written policy which applies to all employees, and only for serious misconduct violations (such as sexual harassment, workplace violence, drug and alcohol violations, and violations of state or federal laws). An unpaid disciplinary suspension is not permitted for matters such as performance or attendance issues (they are not sufficiently serious). Also, note that some states may not recognize this rule.
However, if you prevent an exempt employee from working for a full workweek, the employee does not earn a salary for that week. Thus, a full-week absence can always be unpaid, regardless of the reason (all states recognize this full-workweek rule).
Our topic called "Salary Deductions" has more information.
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['Wage and Hour', 'Compensation']
['Salary deductions', 'Exemptions from Overtime/Minimum Wage']
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