When can you dock a
salaried, exempt employee
for time missed or wrongdoing?
Without fear of “conversion”
If you treat an exempt employee like a non-exempt, you run the risk of converting him or her to a non-exempt, unless this treatment was episodic and you make a record to show you caught the oversight and do not repeat this treatment in the future. Deducting less than a full day’s pay is generally considered proof of conversion.
But there are instances in which such treatment is actually legal, the most discussed, in recent years, being FMLA leave. The statute itself provides that docking an exempt for time less than a full day for non-paid FMLA leave does not evidence conversion.
Here are the other legal bases for docking an exempt employee’s salary. Note that their unit of time off is in a full day or more, and never less than a full day:
(1) one or more full days for personal reasons (other than sickness or accident);
(2) one or more full days for sickness or disability after sickness or disability leave has been exhausted pursuant to a bona fide plan;
(3) Offset for jury duty, witness fees, and military duty;
(4) one or more full days for violation of safety rules of major significance;
(5) First and last weeks of employment;
(6) Unpaid disciplinary suspensions of one or more full days for violating workplace rules, e.g. sexual harassment policy.
One practical lesson from the foregoing: If you are going to discipline an exempt employee, make sure the monetary punishment is in units of full days.