Human Resource Blog

Exempt Employee Pay Deduction

What if an exempt employee comes in late or comes in and leaves again, usually working less than a half day. He has exhausted his sick leave and now is facing termination. Can his pay be deducted?

No, probably not without endangering his status as salaried exempt, under the federal FLSA. The US DOL compliance guide for the FLSA specifically says that even if a salaried employee only works one hour per day, he or she is entitled to the entire day’s pay.

An employer, who docks the employee’s pay when he or she works less than a full day, may become retroactively liable for any overtime the employee has worked in the past.

However, the employee can be written up or otherwise disciplined, and even terminated for not putting in the minimum number of hours expected in the position.

There are two major exceptions – FMLA and ADA. If the employee is entitled to unpaid leave under the federal Family and Medical Leave Act, he or she can legitimately take time off (even partial days) without pay. Also, under some circumstances under the Americans with Disabilities Act, the employee is entitled to work partial days as a reasonable accommodation. In either of these situations, the employer can prorate the worker’s salary, but usually cannot terminate the worker.