Exempt Status Pay Reductions

As a follow-up to our blog on exempt versus non-exempt employees, there are conditions in which exempt employees can have pay reductions. If your employee position has been determined to meet the criteria for exemption, and the employer chooses to make the position exempt, deductions from pay for sickness/disability or personal reasons may only be made as follows:

Employers With Bona Fide Leave Plan:

Status: Exempt
Absence: Sickness or Disability
Absence Period: Partial Day
Can be forced to use leave time. If leave is exhausted or has not become effective yet, no reduction in pay is allowed; however the leave balance may be reduced to the negative.

Status: Exempt
Absence: Sickness or Disability
Absence Period: Full Day
Can be forced to use leave time. If leave is exhausted or has not become effective yet, a full day reduction in pay is allowed (an employer may pay leave time where the balance is zero thereby reducing the leave balance to the negative).

Status: Exempt
Absence: Personal
Absence Period: Partial Day
Can be forced to use leave time. If leave is exhausted or has not become effective yet, no reduction in pay is allowed; however the leave balance may be reduced to the negative.

Status: Exempt
Absence: Personal
Absence Period: Full Day
Can be forced to use leave time. If leave is exhausted or has not become effective yet, a full day reduction in pay is allowed (an employer may pay leave time where the balance is zero thereby reducing the leave balance to the negative).

Employers Without Bona Fide Leave Plan:

Status: Exempt
Absence: Sickness or Disability
Absence Period: Partial Day
No reduction in pay is allowed.

Status: Exempt
Absence: Sickness or Disability
Absence Period: Full Day
No reduction in pay is allowed unless the full workweek is not worked.

Status: Exempt
Absence: Personal
Absence Period: Partial Day
No reduction in pay is allowed.

Status: Exempt
Absence: Personal
Absence Period: Full Day
Reduction in pay is allowed.

If you would like to learn more information on salary basis requirements, please visit the Wage and Hour Division of the U.S. Department of Labor website: http://www.dol.gov/whd.