Generally, an exempt “salaried employee,” one that meets the salary exemption and the “duties” test under the Fair Labor Standards Act, must receive full compensation for a week without regard to the number of days or hours worked in that week as long as they work at least some hours that week.
A key part of the salary exemption that a lot of people miss is the duties test. Not only must employees be compensated at least the minimum salary required by the Department of Labor to be exempt, they must perform (1) executive, (2) professional, or (3) administrative job functions.
Assuming an employee meets both tests, there are seven exceptions to the full-week’s pay requirement:
(1) An exempt employee is absent from work for one or more full days for personal reasons, other than sickness or disability. If they are absent for two full days, you can dock them two full days. If they are absent for one and a half days, you can dock them for one day.
(2) Absences of one or more full days because of sickness or disability if the deduction is made in accordance with a true policy or practice of providing compensation for loss of salary because of sickness or disability.
(3) You cannot deduct for absences because of jury duty, attendance as a witness at trial, or temporary military leave, but you can offset the pay received because of those things.
(4) You can impose penalties for infractions of major safety rules.
(5) You can place someone on unpaid leave for disciplinary suspensions related to workplace conduct or violation of rules. You can only do this pursuant to a written policy which must be applicable to all employees.
(6) You only have to pay the proportion of the week worked for the first and last week of work.
(7) You don’t have to pay for unpaid leave under the FMLA. For example, if an employee usually works 40 hours, and they use 4 hours of unpaid leave under the FMLA, the employer can deduct 10 percent of their salary for that week.
These exceptions are very technical, and you should always consult an attorney before relying on any of them. But used correctly, they are a cost saving tool for employers.
