HR MATTERS E-TIPS
THIS WEEK'S E-TIP: FLSA Trap: Exemptions and Partial Day Absences
August 28, 2007, Volume 9, No. 35
Published by Personnel Policy Service, Inc.
"Your Policy and Compliance Experts Since 1972"
To unsubscribe - see bottom of page
|
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ THIS WEEK'S E-TIP: FLSA Trap: Exemptions and Partial Day Absences The FLSA regulations make it clear that you cannot dock your exempt employees' pay for absences of less than a day. But can you require them to use paid leave for these partial day absences? Find out below what the DOL and courts have to say about this issue and consider how your exempt employees feel about this practice. |
|
| = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = | |
|
THIS WEEK'S E-TIP: FLSA Trap: Exemptions and Partial Day Absences The Fair Labor Standards Act (FLSA) revised regulations addressing what jobs are exempt from the law's minimum wage and overtime requirements have been in effect for a little over 3 years. Those regulations provided much-needed changes and guidance to the exemptions, including an increase to the salary threshold and clarification of the job duties requirements. However, one hot-button topic the Department of Labor (DOL) failed to address is the conflict over the use of paid leave for exempt employees' partial day absences. (The regulations still prohibit employers from docking the pay of exempt employees for absences of less than a day. However, a few exceptions apply for infractions of safety rules of major significance, for certain disciplinary suspensions, for the initial and terminal weeks of employment, and for FMLA leave.) A question arises when employers have policies requiring exempt employees to use hours of paid vacation or sick time for partial day absences. These policies provide a way for employers to attempt to avoid docking pay and jeopardizing the exemption. This approach can raise questions, though, about whether the employee is really being paid on a "salary basis," as required by the FLSA's regulations. Some courts and the DOL disagree about how the requirement affects the employee's exempt status. And, from an employee relations' perspective, the requirement can cause exempt employee ill will, particularly for those who consistently work more than 40 hours a week without additional compensation. The DOL's Position The DOL, in its opinion letters, traditionally has permitted vacation or sick leave offsets as long as the exempt employee does not experience a reduction in compensation. So, according to the DOL, once an employee is out of paid-time off, you may not make any partial day deductions. In the comments to the 2004 regulations, the agency specifically restates this prior position outlined in its opinion letters. Several courts have adopted the DOL's position. For example, in Webster v. Pub. Sch. Emples. of Wash., Inc., 247 F.3d 910 (9th Cir. 2001), the Ninth Circuit determined that an employer can make deductions for partial day absences from an exempt employee's leave bank. According to the court, leave time is not considered salary, even when the leave can be paid out as cash at termination. Similarly, in Schaefer v. Ind. Mich. Power Co., 358 F.3d 394 (6th Cir. 2004), the court acknowledged that exempt status is affected only by monetary deductions for work absences and not by non-monetary deductions from fringe benefits such as personal or sick time. |
|
| ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ | |
|
Some Courts Disagree, Creating Uncertainty However, a few courts have disagreed. They have determined that this practice, even without an actual loss of pay, treats the exempt employee like an hourly, nonexempt employee and, therefore, triggers loss of the exempt status. For example, in Klein v. Rush-Presbyterian-St. Luke's Med. Ctr., 990 F.2d 279 (7th Cir. 1993), the Seventh Circuit determined that a private employer improperly categorized employees as "professional." The employer had established a compensatory time "bank" based on overtime hours from which employees had to draw when working less than eight hours per day. The court ruled against the employer even though the employees never were actually docked if their banks had a negative balance. In addition, some state laws may impose different requirements for docking leave banks. For example, Washington employers may make deductions from leave banks in partial day increments (but for at least one hour) only on the express or implied request of the exempt employee for time off from work. As a result of this disagreement between the courts and the DOL, and since state laws may vary, employers still will be caught in the middle on this issue. Accordingly, if you are a private employer and require exempt employees to use paid leave for absences of less than a day, you should consult legal counsel. (Note that special rules apply for exempt public employees and allow them to be considered exempt even if their pay is reduced for partial day absences as the result of a pay system that meets certain requirements. These rules are discussed in the FLSA regulations at 29 C.F.R. §541.710.) Employee Relations Issues Complicate Matter As a practical matter, though, even if you are in a jurisdiction that allows use of paid leave for partial day absences, you may find that exempt employees resent this offset, particularly if they regularly work more than 40 hours per week. In such a situation, they are not entitled to additional pay when they put in long hours, but are required to use vacation or sick leave if they need a few hours off. If your concern is that your exempt employees may abuse their status by leaving work early or coming in late, address those issues as a separate matter. For example, discipline exempt employees who do not complete their work or who are not available when needed. In other words, do not penalize all your exempt employees just because of the possible abuses of a few. |
|
| ^^^^^^^^^^^^^^^^^^^^^ From Your HR Matters E-Tips Editors ^^^^^^^^^^^^^^^^^^^^^ | |
|
Personnel Policy Manual Service See what others say about the Service ... |
 Request a 30-Day free trial now |
| ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ | |
|
Subscribers to the
Personnel Policy Manual and HR Policy Answers on can find more information on the FLSA exemptions in Hours of Work, Chapter 207, notes 24 through 30, and on the FLSA and the salary basis test for exempts in Hours of Work, Chapter 207, note 32. Not a subscriber? If you would like to order one of our policy
chapters, |
|
| ^^^^^^^^^^^^^^^^^^^^^^^^ HR Policy & Compliance Resources ^^^^^^^^^^^^^^^^ | |
|
Buy and download individual HR Policies for immediate
use in your |
|
YOU CAN TRUST PPS
Information provided in HR Matters E-Tips is researched and reviewed
by the HR experts at Personnel Policy Service as well as employment
law attorneys. However, it is not intended as legal advice. Readers are
encouraged to seek appropriate legal or other professional advice.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Interested in using an article from HR Matters E-Tips on your Web site or
in a newsletter?
Please contact Robin Thomas, Managing Editor of Personnel Policy
Service, Inc., to request permission. You can contact her by email at
editor@ppspublishers.com or by
telephone at 1-800-437-3735.
Please note that the information in every issue of HR Matters E-Tips is
the original, copyrighted work of Personnel Policy Service, Inc., and is
protected under U.S. copyright laws. As such, you may not reprint or
publish in any format any article or portion of article from HR Matters E-
Tips without the express permission of Personnel Policy Service, Inc.
Remember, too, we encourage you to pass along any issue of the E-Tips
by forwarding it to friends and colleagues.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
A note to advertisers:
Do you want to reach the human resources market?
Your message can be seen by over 55,000 HR professionals when you
sponsor an issue of HR Matters E-Tips.
Contact Elise Whitman at
ezine@ppspublishers.com
or call toll-free 1-800-437-3735.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
HR Matters E-Tips is a f-r-e-e service of Personnel Policy Service, Inc.
To subscribe, go to:
http://www.ppspublishers.com/ezsignup.htm
HR Matters is a registered trademark of:
Personnel Policy Service, Inc.
159 St. Matthews Ave., Suite 5, Louisville, KY 40207
Tel: 1-800-437-3735 - Fax: 1-800-755-7011
www.ppspublishers.com
-
www.instanthrpolicies.com
-
www.hrpolicyanswers.com -
www.personnelpolicyservice.com/hrforum
CONTACT US: ezine@ppspublishers.com
FORWARD THIS ISSUE: We invite you to forward HR Matters E-Tips to
a colleague or friend.