I’m very excited to present this guest post from Donna Ballman, the fantastic employment attorney who writes the great Screw You Guys, I’m Going Home blog, where she talks about legal issues in the workplace. If you don’t already subscribe to Donna’s blog, you should do so right now!
Salaried Employees and Missed Days: When Do They Have To Be Paid?
by Donna Ballman
Alison asked me to answer a question from her readers. When I agreed, she asked you to post your questions for me and, boy, did we get lots of great ones. The question that was chosen for me to answer is an area that both employers and employees find confusing. I’ll try to help cut through the confusion and misinformation by answering this great question:
How about an article about “salaried employees”? For example, if I am a salaried employee is my company obligated to pay me for things such as snow days (office closed) or jury duty? What are the pros and cons for the employee to be salary as opposed to hourly? What about “sick days”? If the company doesn’t have “sick days,” is a salaried employee required to use a vacation day if they are “sick”?
If you are salaried, it doesn’t necessarily mean you are an “exempt” employee, meaning you are exempt from the overtime requirements of the Fair Labor Standards Act. Some of the answers to these questions will depend on whether or not you are exempt. Most of these questions are addressed in one federal regulation.
I’ll address the issues in order.
Natural disasters/office closings: If the employee is exempt and they worked any portion of the work week, they have to be paid their entire salary, whether or not the office is closed for a natural disaster such as snow, hurricane, or flood. Further, the regulations state, “If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.” This would include natural disasters, so if the employee is able to work after a natural disaster, then they need to be paid even if they didn’t work any portion of the week. If the employee is non-exempt, then they don’t need to be paid for the time the office is closed. However, if you take deductions from a non-exempt salaried employee it may affect the way overtime is calculated. I’ll explain below.
Jury duty: See answer above. However, some states do require payment for time taken as jury duty. Alabama, Connecticut, Colorado, Massachusetts and New York appear to have requirements that all or part of the juror’s wages be paid during jury duty. The regulation states: “While an employer cannot make deductions from pay for absences of an exempt employee occasioned by jury duty, attendance as a witness or temporary military leave, the employer can offset any amounts received by an employee as jury fees, witness fees or military pay for a particular week against the salary due for that particular week without loss of the exemption.”
Sick time: You can deduct for full-day absences if you have a policy for doing so. You can also apply the employee’s sick leave/PTO time if they have any. The regulation states:
Deductions from pay may be made for absences of one or more full days occasioned by sickness or disability (including work-related accidents) if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by such sickness or disability. The employer is not required to pay any portion of the employee’s salary for full-day absences for which the employee receives compensation under the plan, policy or practice. Deductions for such 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 thereunder. Thus, for example, if an employer maintains a short-term disability insurance plan providing salary replacement for 12 weeks starting on the fourth day of absence, the employer may make deductions from pay for the three days of absence before the employee qualifies for benefits under the plan; for the twelve weeks in which the employee receives salary replacement benefits under the plan; and for absences after the employee has exhausted the 12 weeks of salary replacement benefits. Similarly, an employer may make deductions from pay for absences of one or more full days if salary replacement benefits are provided under a State disability insurance law or under a State workers’ compensation law.
Personal leave: Another exception to the requirement that the employee be paid for the entire week if they work any of it is taking personal leave other than for sickness or disability. The regulations state: “Deductions from pay may be made when an exempt employee is absent from work for one or more full days for personal reasons, other than sickness or disability. Thus, if an employee is absent for two full days to handle personal affairs, the employee’s salaried status will not be affected if deductions are made from the salary for two full-day absences. However, if an exempt employee is absent for one and a half days for personal reasons, the employer can deduct only for the one full-day absence.”
Advantages to salary: Employers like salary because they know exactly what their expenses will be week to week. If an employee is exempt, then paying them salary means you don’t have to pay them overtime. However, some also like to declare non-exempt employees as “salaried” and fail to pay them overtime. That’s bad. Really bad.
Consequences of getting it wrong: If you make improper deductions from a salaried employee, you might lose the overtime exemption. If you fail to pay overtime to someone who is entitled to it, you can end up paying double the amount owed, plus attorney’s fees. And everyone who wasn’t paid in your entire workforce can be joined into one hairy mess of a lawsuit that can be very costly. Don’t screw this up. My recommendation is that if you don’t have a good handle on exempt vs. non-exempt, either get good legal advice from a management side attorney or pay hourly and keep excellent records.
The Department of Labor has quite a few fact sheets that cover many issues like this one on the Fair Labor Standards Act and the other laws they cover. When in doubt, check to see if your issue is addressed.
Thanks for inviting me to blog on this important issue. I hope my answer helped. I’ll try to answer some more questions on my blog, Screw You Guys, I’m Going Home. Keep those questions coming. You can ask here, or in the comments section of my blog.