For a salaried (exempt) employee, missing a full day for personal reasons or sickness (if no sick leave/disability plan applies) allows for a pro-rata pay deduction, but partial-day absences generally do not, unless you use accrued PTO/vacation, which maintains your exempt status. The key is that deductions must be for full days and follow specific rules to avoid jeopardizing the employee's exempt status (overtime eligibility).
Full-Day Absences for Personal Reasons
If an exempt employee misses a full day (or multiple full days) for personal reasons unrelated to illness or disability, the employer may deduct pay for those days. Partial-day deductions are not allowed.
In conclusion, the FLSA does not require employers to provide paid sick leave to salaried employees. However, employers may choose to offer paid sick leave as a benefit to their employees.
Salaried employees typically receive a fixed weekly pay regardless of hours worked. However, if sick leave is taken, employers may deduct from accrued sick or personal days rather than reducing salary. Overtime pay usually does not apply to salaried employees exempt under labor laws.
Vacation and PTO: While you can't deduct from the salary for partial-day absences, you can deduct from their vacation or PTO bank, regardless of the duration of the absence. This helps maintain the exempt status while managing time off efficiently.
Salaried exempt employees must receive full weekly pay if they work any part of the week. Employers can require use of PTO to cover absences, but total pay doesn't change. If PTO is used up, salary deductions are allowed — with proper policy in place.
The "new rule" for salaried workers refers to the U.S. Department of Labor's (DOL) 2024 overtime rule, which significantly raised salary thresholds for exempt status (making more lower-paid salaried workers eligible for overtime) but was largely vacated by a federal court in November 2024, meaning the scheduled increases to $43,888 (July 1, 2024) and $58,656 (Jan 1, 2025) were blocked. While the original 2019 salary threshold of $35,568 ($684/week) temporarily rose to $43,888 in July 2024 before being blocked, the rule is currently on hold, with no new automatic triennial updates planned, and the existing $35,568 threshold largely remains in effect, though state laws (like California's) may have higher requirements.
The drawbacks of receiving salary pay include: No overtime: Companies are not required to pay overtime to salaried employees, although some do. If you work 60 hours in a week rather than just 40 hours, you may not be eligible for overtime pay or compensated for your time.
When a salaried employee exhausts their paid time off (PTO) and needs additional time off, their employer may allow them to take unpaid leave or explore other options like borrowing against future PTO.
A typical company sick pay scheme
You would then receive your normal pay during any period that you are off work due to illness, up to a set number of weeks. After this, you're likely to receive half-pay for a further period before any sick leave you take becomes unpaid.
For a salaried exempt employee, you can deduct for full days missed, but not for individual hours. My controller and HR director, say yes. The employee is set to work M-F 8-5 and if she does not meet the required schedule, then we can deduct.
Sick day rules vary greatly, with no federal law requiring paid sick leave, but many states and cities mandate it for illness, appointments, or family care, often with accrual rates and usage guidelines. The Family and Medical Leave Act (FMLA) provides up to 12 weeks of unpaid leave for serious conditions, while specific state laws (like in CA, MI) and employer policies dictate paid time off for broader reasons, sometimes including domestic violence or adoption. Employers can usually require a doctor's note for longer absences (e.g., over 3 days) but can't pry into specifics of the illness.
An employer may make a deduction from an exempt employee's salary for the employee's full day absences due to sickness provided the deduction is made in accordance with a bona fide plan, policy or practice of providing wage replacement benefits for such absences.
In California, the law does not mandate salaried employees, even those that are exempt, to clock in and out. It's up to the employer to decide if salaried employees should utilize a time clock each day.
Your time off will be unpaid leave unless your contract of employment says you will be paid. The amount of time off has to be reasonable and you can only take enough time to deal with the urgent problem. For example, you can take time off when: someone gets sick or is injured.
In most cases, a salaried exempt employee must receive their full salary even if they miss several hours for medical appointments. Employers may deduct paid time off (PTO), but generally cannot reduce salary for partial-day absences, even when the employee offers to take the time unpaid.
Generally, if a salaried exempt employee doesn't work in a particular week, that employee doesn't have to be paid for that week. However, when taking a partial day off, salaried exempt employees must receive a full day's pay.
Advantages of a salary
The benefits vary according to the company, but employees generally have better access to health insurance, pension programs, parental leave and paid time off. These benefits improve the quality of life for salaried employees and make them more committed to their employer.
Salary pay works by giving an employee a fixed annual amount, divided into regular paychecks (e.g., weekly, biweekly, monthly), regardless of the exact hours worked, making it predictable for budgeting, with the expectation of fulfilling job duties and often including benefits like health insurance. Unlike hourly pay (where you're paid for each hour worked, plus overtime), salaried employees typically don't track hours and may work more than 40 hours without extra pay, but they are legally protected from salary deductions for minor work quality/quantity issues, with specific minimum salary thresholds and job duty tests determining this "exempt" status.
Yes, it's legal to reclassify employees from salaried to hourly—but it must be done carefully to remain compliant with FLSA and avoid employee confusion or potential legal claims.
Employers in California and elsewhere can lawfully reduce the salary of exempt employees for any period of unpaid leave taken under the FMLA or CFRA, including intermittent or reduced-schedule leave.