“Can I have the day off without pay?”, asked the manager.
Amanda was the new Sales Manager. She wanted a few days off without pay to get married and have a short honeymoon, yet did not have enough PTO to cover the days off. She asked the fateful question, “Can I have the days off without pay?” You want to help her, but what you say next could have legal consequences.
We all have had the scenario…. not having enough PTO or no more PTO left. A salaried manager or employee wants to take a few days off without pay. What do we do? Just give it to them and dock their pay? Well….it can be done but there are laws and considerations that need to be kept in mind.
Handling time off for salaried employees can be a delicate balancing act, especially in the hospitality industry where operations run around the clock. For General Managers and senior-level hoteliers, understanding the legal nuances of pay deductions for salaried, exempt employees is crucial to avoid costly mistakes. Let’s delve into the Department of Labor (DOL) guidelines and best practices to ensure compliance and maintain fair employee relations.
Understanding the Salary Basis Requirement
According to the Fair Labor Standards Act (FLSA), employees classified as bona fide executive, administrative, professional, and outside sales employees are exempt from minimum wage and overtime pay. These “white-collar” exemptions require that employees be paid on a salary basis at not less than $844 per week! Importantly, an exempt employee’s salary cannot fluctuate based on the quality or quantity of work performed.
When Can You Legally Dock Pay?
While the general rule is that exempt employees must receive their full salaries for any week they perform work, there are specific scenarios where pay deductions are permissible:
1. Full-Day Absences for Personal Reasons
You can deduct pay when an employee takes one or more full days off for personal reasons other than sickness or disability.
2. Full-Day Absences Due to Sickness or Disability
If your business has a bona fide plan that compensates for lost salary due to illness, you can make deductions when the employee has exhausted their available paid time off.
3. Safety Rule Violations
Deductions are allowed for penalties imposed in good faith for infractions of major safety rules.
4. Offsetting Jury, Witness Fees, or Military Pay
You can offset amounts received for jury duty, witness fees, or military pay. However, you cannot make additional deductions for these absences.
5. Unpaid Disciplinary Suspensions
Deductions for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions are allowed.
6. Initial and Final Weeks of Employment
Deductions are permissible for partial weeks worked during the beginning or end of employment.
7. FMLA Leave
You can convert a salaried employee to an hourly basis during periods of reduced or intermittent work schedules under the Family and Medical Leave Act without affecting their exempt status.
Practical Considerations and Best Practices
To stay compliant, follow these best practices:
· Document Policies Clearly
Ensure that your policies on paid time off and deductions are clearly documented and communicated to employees. These 7 exceptions above MUST be in your employee handbook.
· Monitor Work Performed
Before making a deduction, confirm that no work was performed on the day in question. For planned unpaid leave, clarify that no work is expected. You may want to consider having them document that they understand this and then document that they did no work upon their return….this includes answering emails.
· Avoid Partial-Day Deductions
Remember that deductions for personal or sick time and unpaid disciplinary suspensions should only be in full-day increments (except under FMLA).
· Reimburse for Improper Deductions
If you inadvertently make an improper deduction, reimburse the employee promptly to maintain their exempt status.
Navigating the complexities of time off and salary deductions for exempt employees requires a thorough understanding of DOL regulations and careful implementation of policies. By adhering to these guidelines, hoteliers can ensure they remain compliant while fostering a fair and supportive work environment.
You want to be helpful and good to your team…but also need to stay legal. By being proactive and informed, you can avoid legal pitfalls, be an employer of choice, and maintain smooth operations!
