To protect employee exemptions from overtime, make sure your sick leave policy defines which classifications would not be subject to pay deductions.
In 1997, the U.S. Supreme Court said employees covered by a policy that permits deductions in pay of less than a day would be denied exempt status. (Auer v. Robbins, 519 U.S. 452) It's unsettled, however, whether courts will find that the existence of such a policy alone, without any actual deductions, would strip a Fair Labor Standards Act exemption.
The 10th U.S. Circuit Court of Appeals recently ruled that an office manager qualified as an exempt ad-ministrative employee, although the employer's sick leave policy allowed pay deductions for less than a day under certain circumstances. It decided the employer must have an actual practice of making such deductions to forfeit the exemption. (Gagnon v. Resource Technology Inc., No. 00-2410, 10th Cir., 2001)
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