You may assume that employers must pay their entire salary even if they arrive late and leave early. Well, that’s only partially true.
If your includes time off for vacation, personal days and sick leave, you can deduct time from those balances when exempt employees are late or sick.
However, once exempt employees use up their leave benefits, make sure you follow the rules set forth by the U.S. Labor Department. Otherwise, you’ll jeopardize their exempt status and risk a lawsuit for unpaid overtime pay.
Remember: Under the Fair Labor Standards Act, you must pay exempt employees a set salary for the week regardless of how much or how little work they perform.
Recent case: Diane Judson and Nigel Simpson sued on behalf of themselves and all other exempt employees after their employer, JM Family Enterprises, told them to use personal or vacation time if they were away from work more than four hours a day.
Their lawyers argued that by making them take leave, the company destroyed their exempt status and wasn’t paying them their full salaries.
Not so, said the 11th Circuit. Employers can charge exempt employees’ leave banks for partial-day absences so long as they continue to receive their full salary at the end of the pay period. (Judson, Simpson v. JM Family Enterprises, et al., No. 05-16433, 11th Cir., 2006)
Final tip: Don’t deduct short absences from salary even if employees have used up their accumulated leave or don’t yet qualify.