The impact of partial-day absences on exempt status

Q. We have a policy that allows exempt employees to take partial days off and have the balance of the day charged against their accrued vacation time in two-hour increments. I have concerns that this arrangement—despite the fact the exempt employees are getting their full salaries—could appear that they’re being treated as hourly employees, thus jeopardizing their FLSA exemption status.

I have heard in some circles that if an exempt employee works at all on a given day, he or she should be paid for the full day and not be subject to vacation use. Do I have any cause for concern? — A.S., Texas

No, your policy should pass muster under the federal wage-and-hour labor laws. As long as the employees receive their full salaries each week, this policy should not jeopardize their exemptions.

To qualify as exempt, most executive, administrative and professional employees must be paid on a salary basis. In no event can any deductions from an exempt employee’s salary be made for full- or partial-day absences occasioned by lack of work. Employers can, however, make deductions for absences from an exempt employee’s leave bank (whether vacation, PTO, or other leave benefits) in hourly increments, as long as the employee’s salary is not reduced. 

If exempt employees receive their full predetermined salaries, deductions from a leave bank, whether in full-day increments or not, do not affect their exempt status.