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Aug11

Salaried Pay if Employee Resigns

I have a salaried employee that worked two (2) full days of work and then for 1-1/2hr on the third work day and quit. Is it safe to say I can take his salary and divide it by 5 days and pay for 2 days and then for the 1-1/2hr.?

It’s important to remember the difference between classification under the Fair Labor Standards Act (FLSA) and payment method. Exempt and non-exempt are FLSA classifications. Salaried and hourly refer to payment methods.

Non-exempt employees must receive at least minimum wage for each hour worked and overtime wages of one and one-half times their normal wage for each hour worked over 40 in a workweek. Non-exempt employees must be paid for each hour worked but are not required to be paid for any hours not actually worked.

To qualify for exempt status under the FLSA, employees generally must meet certain tests regarding their job duties and certain compensation requirements. Exempt employees receive a fixed, pre-determined salary for a workweek.

There are few permissible deductions allowed from an exempt employee’s pay including:
• When an employee is absent from work for one or more full days for personal reasons other than sickness or disability;
• For absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness;
• To offset amounts employees receive as jury or witness fees, or for temporary military duty pay;
• For penalties imposed in good faith for infractions of safety rules of major significance;
• For unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions;
• In the employee’s initial or terminal week of employment if the employee does not work the full week, or
• For unpaid leave taken by the employee under the federal Family and Medical Leave Act.

The FLSA is clear that deductions from an exempt employee’s salary are permissible if the employee doesn’t work the full week during the initial or final week of employment. It’s common practice to calculate the exempt employee’s hourly rate by dividing the weekly salary amount by the number of hours usually worked in a week. Then use the hourly rate to determine the prorated salary.

This entry was posted on Monday, August 11th, 2014 at 7:19 pm and is filed under
Compensation.
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