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Jan19

Medical leave in Business of 7 Employees

I have an employee that has been out of the office several months in the last 6 months. First, for a surgery which was partly unpaid leave of a couple weeks and second, for an infection of almost 2 months with no resolution so far. I think this employee who is on salary will return next week but unsure if she can return at full time hours. Note I acquired this business 12 months ago. If she returns to work at lesser hours am I required to pay her full salary? She was compensated by the previous owner well over the market rate. I ask this because in our office I cannot afford to pay a temp and her inflated salary at the same time or hire someone else on. Also, how long do I need to keep paying her salary at this rate if she never becomes 100%? Also, I have only 7 employees.

Even an employer with only 7 employees is covered under the federal Fair Labor Standards Act (FLSA). The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.

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

Non-exempt employees must be paid for all hours worked and are subject to overtime and minimum wage requirements prescribed by the FLSA. Conversely, exempt employees receive a fixed predetermined salary and are excluded from overtime pay provisions.

Salary and hourly paid are compensation terms. Though uncommon, a non-exempt employee can be paid a salary each workweek.

Let’s assume the employee in question is exempt under the FLSA.

Deductions from an exempt employee’s salary are permissible in limited circumstances 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 and the employee has exhausted such paid leave;
• 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 (FMLA).

Employers are not required to pay any portion of an employee’s salary for full-day absences for which the employee receives wage replacement benefits under disability insurance or worker’s compensation. Furthermore, deductions for full day absences may be made if the employee has exhausted her paid time off accruals and is no longer eligible for wage replacement benefits.

Remember, employees are considered to be paid on a “salary basis” to meet exempt criteria if they are paid a predetermined amount, not less than $455 per week. Even with full day deductions, a salary of less than $455 jeopardizes the employee’s exempt status.

With only 7 employees you’re not required to comply with the federal anti-discrimination and leave laws namely the Americans with Disabilities Act (ADA) and the Family & Medical Leave Act (FMLA). Absent applicable state laws or employment contract stating otherwise, the employee has no job reinstatement rights. You still want to treat the employee fairly and in the same manner you would treat similarly situated employees.

It’s worth having an honest conversation with this employee about her expectations for returning to work as well as what you’re able to provide. You may consider reducing the employee’s hours permanently; thus, reducing her salary. You may also consider making the employee non-exempt and pay her per hours worked.

This entry was posted on Tuesday, January 19th, 2016 at 8:40 pm and is filed under
Compensation.
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