Q. Can we give an
A. Yes, you can reward with extra time off; just be careful how you structure it. Don't create the impression that you base the vacation bonuses on an hour-for-hour allotment. That could make it appear you're compensating exempt employees on an hourly basis, which could jeopardize their exempt status.
Although several federal courts have said that paying extra on an hourly basis doesn't automatically destroy the exemption, the safer approach is to stay away from an hour-for-hour payment. Instead, offer the additional time off as a bonus or appreciation reward that's unrelated to time worked.