Can we deduct pay from exempt employees who have used up PTO and FMLA leave?
Q. My company provides paid time off (PTO) to our employees. The PTO policy is contained in the employee handbook and provides for 20 PTO days a year. Employees may use PTO for illnesses. We have an employee who has a degree in accounting and is treated as a salaried, exempt professional employee under the Fair Labor Standards Act (FLSA). He became ill and has used his 12 weeks of FMLA leave. He chose to use the PTO concurrent with his FMLA leave. Since he returned, he has missed seven additional days of work. Can the company deduct these missed days from his pay without losing the salaried, exempt status?
A. Yes. You may deduct pay 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 such sickness or disability.
You may make deductions for such full-day absences before the employee has qualified under the plan and after the employee has exhausted the plan’s leave allowance.
In this case, you have a PTO policy that permits the employee to use the PTO for illness. The employee has used up all his PTO. Therefore, you can deduct full-day absences caused by illness that exceed the allowed PTO.