Docking PTO for a Partial-Day Absence

08/19/08

In 2005, the Department of Labor recently affirmed that it is permissible to reduce an exempt employee’s paid time off bank for absences of less than a day. The ruling was expressed in an administrator’s opinion letter early this year.

Under the terms of the Fair Labor Standards Act, any employee working in a bona fide executive, administrative, or professional capacity is exempt from overtime requirements, provided, among other tests, that they are compensated on a salary basis. Specifically, the law prohibits the reduction of the salary “based on the quality or quantity of work performed.” The rule caused confusion among employers, though, who feared that employees may lose their exempt status if their PTO banks were reduced for partial day absences.

In opinion letter FLSA2005-7, Acting Administrator Alfred B. Robinson wrote: that where an employer has a benefits plan (e.g., vacation time, sick leave), it is permissible to substitute or reduce the accrued leave in the plan for the time an employee is absent from work, whether a partial day or a full day, without affecting the salary basis of payment, if the employee nevertheless receives in payment his or her guaranteed salary. But the letter also warns employers that “payment of the employee’s guaranteed salary must be made, even if an employee has no accrued benefits in the leave plan and the account has a negative balance, where the employee’s absence is for less than a full day.”

In short, you may dock a PTO account for a partial-day absence, but you may not dock salary for any absences less than a day.


November 2005