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Your company has a Paid-Time-Off (PTO) plan that provides workers with a set number of days for absences due to vacation, illness, disability or personal reasons. The plan applies both to rank-and-file workers and to executive, administrative and professional employees who are classified as exempt for overtime-pay purposes. As the employer, may you make deductions of less than a full day for absences of exempt personnel?
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Answer: |
Yes, provided that your company has a valid and fairly administered leave plan. The issue is whether a deduction from PTO leave for a partial day of absence violates the requirement that exempt executive, administrative and professional workers receive a salary. The Wage and Hour Division says that it does not. The key is whether or not the exempt employees receive their guaranteed salaries, despite the absences. It is permissible to deduct half a day from the leave bank, so long as no deduction is made from actual pay.
Negative PTO balances. Deductions from pay in partial-day amounts may not be made for exempt personnel who have negative balances in their PTO accounts. In the situation of a negative balance, pay may be reduced only in full-day amounts; for example, one or two days, not a half a day or a day and a half. Moreover, the deduction in pay must be pursuant to a valid leave plan that covers sickness and disability.
A valid plan is one that defines the benefits, has been communicated to eligible employees, operates as it is described and is administered in an impartial manner. The plan does not have to be limited to sickness and disability.
There is a minority view that employers should be able to reduce PTO accounts of exempt personnel for partial days of absence when employees are allowed to cash out their accounts when they leave or when an employer discourages a negative balance. A couple of courts have so held, although the Division does not share that view.
Source: W & H Opinion Letter, 02-04 CCH WH ¶31,118, January 7, 2005 |
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