Generally, if an exempt employee performs any work during the workweek, the employee must be paid the full salary amount, regardless of the number of days or hours actually worked. There are, however, limited situations in which an employer can make deductions:
- When the exempt employee is absent from work for one or more full days for personal reasons other than sickness or injury.
- When the exempt employee is absent for one or more full days due to his or her sickness or injury, if the employer has a plan, policy, or practice of providing paid time off for sickness or injury and it is before the employee has qualified for such plan, policy, or practice, or after the employee has exhausted all of that leave.
- To offset any amount received by an employee for jury duty, attendance as a witness, or temporary military leave.
- For penalties imposed in good faith for infractions of safety rules of major significance.
- For unpaid disciplinary suspensions of one or more full days for infractions of written workplace conduct rules.
- For time the employee takes as unpaid leave under the Family and Medical Leave Act.
A good rule of thumb is that, outside the FMLA context, deductions are generally not allowed for a partial day absence.
Some of the most common mistakes are: deductions of a day's pay because the employer was closed due to inclement weather; deductions for a full day because the employee was absent for jury duty; and deductions for a full day where the employee was out sick but the employer does not have a plan providing for paid sick leave.
Because improper deductions can result in the loss of the exemption from overtime, protect your Company with a safe harbor provision that encourages the reporting of any improper deductions and commits to correcting any deductions that have been improperly made. Also, your Company should periodically audit its records to ensure compliance with the FLSA relating to deductions made from the salaries of exempt employees.