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Aug16

Salary Employee Deductions and PTO

If a salary employee in the state of PA works less than the 40 hours required for just that week, say due to a personal appointment, can pay be adjusted? Also, can the salary employee’s PTO be accrued by amount of hours worked?

Like the federal Fair Labor Standards Act (FLSA), Pennsylvania law requires non-exempt employees to receive overtime pay of at least one and one half times their regular rate of pay for any hours worked over 40 in a given workweek. Both federal and Pennsylvania law allow for certain exemptions from overtime regulations.

Under both laws, employees are classified as either non-exempt or exempt.

Non-exempt employees must be paid for all hours worked and are subject to overtime and minimum wage requirements.

Conversely, exempt employees receive a fixed predetermined salary for any week during which work is performed regardless of the quantity or quality of such work. Exempt employees are excluded from overtime pay provisions.

Hourly and salary are compensation terms.

Let’s assume the employee in question is exempt.

Both federal and Pennsylvania state laws provide limited permissible deductions from an exempt employee’s salary. Though there are minor differences in the laws, the FLSA provides the greater benefit to employees. Thus, the FLSA must be followed.

Under the FLSA, permissible deductions include:

  • 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 (FMLA).

So, an exempt employee’s salary can be deducted for absences due to personal reasons but only in full day increments. Partial day deductions are not permitted under federal law.

Neither federal nor Pennsylvania law require employers to provide employees with paid time off (PTO) benefits. Thus, employers are generally able to adopt PTO policies at their discretion, including how time is accrued. Just remember, Pennsylvania employers are required to adhere to their own established policies as a contractual matter.

So, if an employer’s PTO policy allows employees to accrue time off per hours worked, such a policy can be applied to exempt employees without affecting the exempt status.

This entry was posted on Tuesday, August 16th, 2016 at 7:22 pm and is filed under
Benefits, Compensation.
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