Caveats on Deducting from Exempt Employee’s Salary for Sick Time

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. There is no bright-line test for what is a reasonable number of absences. Both the U.S. Department of Labor and the California Division of Labor Standards Enforcement state that a determination of whether a plan is bona fide would depend on the plan itself and must be made on a case-by-case basis.

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: If you have a paid time off (PTO) plan rather than a pure sick leave plan, the law is not clear about whether you can make a salary deduction when an exempt employee is out sick but doesn’t have any PTO in his/her leave bank. Employers with questions about whether any leave policy meets the definition of bona fide should consult legal counsel.

Column updated April 3, 2019.


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.

Staff Contact: Erika Pickles

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Erika Pickles
Erika Pickles joined the CalChamber in 2015 as an HR adviser/employment law counsel. She previously represented employers in California and federal employment law litigation, class actions, and private arbitration involving a range of workplace-related issues, including wage and hour, discrimination, harassment, retaliation and wrongful termination claims. She also investigated and responded to administrative claims before state and federal agencies, and conducted employment law training seminars. She holds a J.D. from the University of San Francisco School of Law.