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Salary for Exempt Employees during Holiday

We are in California and have paid holiday policy. Our company will be closed on Black Friday and we asked all employees to use their Paid Time-Off (PTO) for Paid Black Friday day-off. Otherwise, Black Friday won’t be a paid day-off. This announcement is very simple for non-exempt employees. However, we have some exempt employees who don’t have enough PTO balance for Black Friday day-off. As far as I know, exempt employees should get fully paid for a week even though they don’t have enough PTO for Black Friday because company decides to close all office and it is not exempt employees day-off for their personal purpose. We don’t allow exempt employees to work without their manager’s supervising. However, our company decided that the Black Friday won’t be paid day-off for exempt employees who don’t have enough PTO balance. Don’t we need to pay to exempt employees for Black Friday who don’t have PTO balance?

The federal Fair Labor Standards Act (FLSA) establishes compensation guidelines for employees.

Under the FLSA, employees are classified as either non-exempt or exempt.

Non-exempt means that an employee is subject to the overtime and minimum wage requirements prescribed by the FLSA. Conversely, exempt employees are excluded from such provisions.

Non-exempt employees are paid per hour for each and every hour worked and need not be paid for time not actually worked.

Exempt employees receive a fixed, predetermined salary for any workweek during which work is performed regardless of the quantity or quality of work performed.

There are limited permissible deductions from an exempt employee’s salary 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.

Furthermore, deductions from an exempt employee’s salary for absences occasioned by the employer violate the salary basis test for exempt status. An employer closing the business to recognize a holiday would be an absence “occasioned by the employer.” Also, an exempt employee’s salary cannot be reduced if the employee is ready, willing, and able to work, but work was not available such as the company being closed for a holiday.

Employers are permitted to require employees, both non-exempt and exempt, to use their PTO accruals for business closures.

As previously stated, non-exempt employees need not be paid for time not actually worked. So, a non-exempt employee who has exhausted their PTO bank is simply not paid for the remaining hours.

However, if an exempt employee has exhausted their PTO bank, they must still receive their full salary for the workweek assuming they performed at least some work during that workweek.

This entry was posted on Wednesday, November 25th, 2015 at 7:47 pm and is filed under
Benefits, Compensation, Labor Laws.
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