Q. Our company gives eight hours of sick leave per month to. We’ve been told that, under the Fair Labor Standards Act ( ), are to be paid whenever they are sick. So our exempt employees have virtually an unlimited sick-leave balance. Is this a correct way to interpret the FLSA? Should we have some type of sick-leave accrual and tracking for our exempts?
A. As a general rule, exempt employees must receive their full salaries for any week in which they perform any work, regardless of how many days or hours they work. There are, however, limited exceptions to the prohibition against deductions.
For example, deductions from pay may be made for absences of one or more full days occasioned by sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by sickness or disability. The employer is not required to pay any portion of the employee’s salary for full-day absences for which he or she receives compensation under the plan, policy or practice.
To constitute a bona fide sick plan, it must provide a reasonable number of absences on account of sickness without loss of pay. There is no bright-line test articulating how many paid sick days and how short a waiting period are required for a plan to be bona fide; it is a fact-specific inquiry.
If an employee receives some form of salary replacement during illness (pursuant to a bona fide plan), then you can deduct from the employee’s salary for those days. Practically speaking, there would be no salary loss.
Deductions for 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. In this scenario, deductions would result in a salary loss.
If you do not have a bona fide sick leave plan for exempt employees, you may not make deductions from their salaries for absences due to sickness without violating the FLSA.