When a salaried, exempt employee calls in sick, the rules about pay get complicated. Most salaried employees are exempt from the rules of the Fair Labor Standards Act about overtime; however, the rules address what’s proper and improper when it comes to deductions for salaried, exempt employees. Salaried employees – those considered exempt – can take off a partial day for sick time and not have their pay docked, but when they take off a full day, their employer is entitled to deduct the equivalent of a full day’s pay from their paychecks.
A salary amount usually is referred to as annual amount paid to employees; however, some employers – particularly some state government agencies – refer to salary amounts in terms of monthly compensation. Regardless how the salary is computed or stated, salaried employees are compensated based on their professional experience, expertise, qualifications and their ability to perform the job.
Nature of Salaried Work
Salaried employees are in control of the manner in which they fulfill their responsibilities and are, therefore, not subject to having pay deducted for the few hours they might take off during the day. Employees may not deduct from a salaried employee's pay when the absence -- for illness, sick time or personal reasons -- is for a partial day.
Salaried employees are expected to perform their job duties, even if it takes more than the typical 40 hours in a workweek. Due to the nature of their work and their responsibilities, many salaried employees often work more than 40 hours a week. They are exempt because their jobs require them to use independent judgment, discretion and they are involved in either their employers' business operations or management.
The independent judgment with which they perform their job duties also extends to how and when they perform their duties. For example, if a salaried employee is notified on Monday that she's responsible for producing a report by the close of business on Friday, she may decide to work past normal business hours or work on the report while at home some days. Therefore, if she's sick on Tuesday afternoon, she uses independent judgment to determine how she will complete the report that's due on Friday. Taking off an afternoon due to illness will not result in losing pay for the four hours she's off from work.
The U.S. Department of Labor states: "Deductions for partial day absences generally violate the salary basis rule, except those occurring in the first or final week of an exempt employee's employment or for unpaid leave under the Family and Medical Leave Act."
Paid Time Off
Most employers provide paid time off (PTO) benefits to salaried and hourly employees, which means they can take time off for vacation and sick time under the company's PTO policy. PTO policies grant employees a certain amount of time, and whenever an employee is off work for vacation, personal reasons or illness, the employer deducts that time from the employee's PTO bank.
Because hourly employees are paid according to the number of hours they work, the employer deducts the number of hours for a partial day when an hourly employee takes time off for illness. On the other hand, because a salaried employee is not compensated according to the number of hours he works, the employer cannot deduct the number of hours for a partial day when a salaried employee takes time off from his job.
When either an hourly employee or a salaried employee takes a full day off from work, however, that day is deducted from the employee's PTO bank. If the employee has exhausted all of the time in a PTO bank, the hourly employee has a full day's pay deducted from his paycheck and the salaried employee who has no more PTO has the equivalent amount of a day's pay deducted from his paycheck.
Sick Pay for Salaried, Exempt Employees
According to the U.S. Department of Labor, the federal agency that enforces the FLSA, employers may make a deduction from a salaried, exempt employee’s pay. The department states: “An employer may make a deduction from an exempt employee's salary for the employee's full day absences due to sickness provided the deduction is made in accordance with a bona fide plan, policy or practice of providing wage replacement benefits for such absences.” The “bona fide plan, plan, policy or practice” to which the department refers is the PTO policy. Although this rule permits an employer to deduct pay from a salaried, exempt employee’s pay for a full day; however, employers may not deduct pay for partial day absences for sick pay.
The only time an employer may deduct partial pay from an exempt employee's pay is for intermittent leave covered by the Family and Medical Leave Act (FMLA). Salaried employees who take leave under FMLA for less than a full day, may have their pay deducted on a pro rata basis for the time absent from work due to FMLA leave.
- U.S. Department of Labor: Compensation Requirements: Sick Leave and Disability Leave
- University of Pennsylvania, Division of Human Resources: Pay Practices and Procedures: Prohibiting Improper Pay Deductions and Overpayments/Complaint Procedure
- U.S. Department of Labor: Compensation Requirements: Deductions