An exempt employee has missed two days of work this week because she was sick, but she has used all her sick leave. Can I deduct two days’ pay from her salary?
The general rule for exempt employees is that if they perform any work in the workweek, they must receive their full weekly salary. If an exempt employee is out sick for part of the workweek, the employee will still be paid her weekly salary, but you can deduct from the employee’s sick leave bank, assuming she has time available.
If the employee is out sick and doesn’t have any available sick leave, as in the question above, you can deduct from the employee’s pay only if you have a bona fide sick leave plan.
Bona Fide Sick Leave Plan
To qualify as bona fide, your sick leave plan must:
• Have defined sick leave benefits that are communicated to employees;
• Operate as described in the plan;
• Be administered impartially; and
• Not be designed to evade the requirement that exempt employees be paid on a salary basis.
In addition, your sick leave plan must provide a “reasonable” number of sick days. Although there isn’t a bright-line test for determining how many days are considered reasonable, the U.S. Department of Labor has held that plans providing at least five days qualified as bona fide. Consult legal counsel if you have questions about whether your plan would qualify as bona fide.
Full Days Only
Assuming you have a bona fide sick leave plan, you can make a deduction from your exempt employee’s salary, but only if the employee is out sick for a full day. If the employee is absent for only part of the day, you can’t make a partial day deduction from her salary—she must be paid her full salary.
Note: The answer to this question would be different if you had a paid time off (PTO) plan instead of a sick leave plan. PTO plans are not considered bona fide sick leave plans, so you cannot deduct from the exempt employee’s salary when she is out sick but doesn’t have any PTO to use.
Column based on questions asked by callers on the Labor Law Helpline, a service to California Chamber of Commerce preferred and executive members. For expert explanations of labor laws and Cal/OSHA regulations, not legal counsel for specific situations, call (800) 348-2262 or submit your question at www.hrcalifornia.com.