The Question? – Zander left work early yesterday – can I dock his pay?
Well, the answer to that question is – it depends. You see docking someone’s pay – or reducing the number of hours you are going to pay them, depends on their employee classification. Non exempt employees (those eligible for overtime) are paid for the hours they work. So if they don’t work it, they don’t get paid for it.
Pretty straight forward, right?
Exempt employees are a different question altogether. You see there are some company benefits for exempt employees – you don’t have to pay them overtime, so they have to work as long as it takes to get the job done. But there are also some company drawbacks – they aren’t paid for the hours work, they are paid a flat weekly salary. So you, as the employer, are really limited on why and how you can do anything to reduce that weekly salary amount.
This piece is important because, if you get it wrong, you can cancel out that exempt classification – and that means you are now responsible for overtime, meal and rest breaks and all the other joys that come with the administration of non-exempt employees.
So, back to Zander. Let’s say he is exempt – well, you can’t dock his pay, but you can dock her PTO bank. So if Zander has vacation or personal hours, you can deduct the time from that bank. That way, his pay will remain the same.
“…you can’t require them to work the day before or after the holiday to get paid. I know that’s a popular policy, but it can’t apply to exempt employees.“
So, when CAN you dock an exempt employee’s salary?
Well, you can deduct if they don’t work for a full week – and by full week, I am referring to your payroll week. If your payroll week is Sunday through Saturday, and Zander is out Monday – Friday, but then works that next Saturday – then you have to pay him for the week. Because he worked one day (that Saturday) in the payroll week, so he has to be paid for the full week.
But, if Zander doesn’t work any days that week, then you don’t have to pay him.
If Zander’s start date or termination date falls mid week, you can pro rate those weeks and pay only for the portion he worked. Again, this only applies at the beginning and end of Zander’s employment.
If Zander is voluntarily absent form work for a full day for personal reasons – meaning something other than sickness of disability. Well, then you can dock a full day’s pay. But if he has any paid time off, like vacation etc., it might be better to take it from that bank – just to be on the safe side of things.
And speaking of illness. If you don’t have some sort of sick leave policy (and honestly, so many states have mandatory sick leave, so they absolutely may not apply to you). But, if you don’t have a sick leave policy, and Zander comes in on Monday for 2 hrs, realizes he doesn’t feel well and goes home for the rest of the week – well then you have to pay him for the full week. That’s because, absent a sick leave policy, you can’t dock his pay.
However, if you do have a sick leave plan in place, and either the employee isn’t yet eligible for it, or has used all his time, then you are allowed to dock for a full day. But again, if it’s only a part of a day, don’t deduct the time.
Now, if Zander is out a full day or partial day due to taking time under the Family and Medical Leave Act, or FMLA – then you can dock his pay. And keep in mind, there is a bit of a calculation that has to happen on figuring out what to pay for a partial week or day. You have to pay a proportionate part of the full salary for time worked.
If Zander is on Jury Duty, or witness duty or temporary military duty – unless it’s a full week or more, you have to pay him.
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Another thing that comes up is leave without pay for policy violations. Well, you can’t do that with exempt employees unless you have a clear policy in place, it’s for one or more full days (no partial days), and it’s specifically related to policies around things like harassment and violence.
You can’t reduce their pay because of the quality or quantity of their work, so that type of policy wouldn’t apply. And by the way – if they’re doing a bad job, you’ll have to address it directly with them as a performance issue.
What about holidays – well unless you close the business for a full workweek; exempt employees have to be paid for the holiday. And here’s a pro tip – you can’t require them to work the day before or after the holiday to get paid. I know that’s a popular policy, but it can’t apply to exempt employees. They have to be paid no matter.
So, I keep saying that you can’t dock their pay but you can take time from their time off bank. What happens when that bank runs dry? Well then, generally speaking, you can dock for a full day or more
Now keep in mind – in addition to the federal guidelines, your state may have specific rules around this topic as well. So be sure to check in your location.
The takeaway – I suggest that before you dock any pay for an exempt level employee, that you consult with counsel. As you can tell, the rules around when you can and can’t are a bit complex. And the down side of getting it wrong is just too big.