Can you deduct pay from a salaried exempt employee?

What is an exempt employee?

Exempt workers are paid on a salaried basis. Salaried employees receive a prespecified amount of compensation each pay period. Their salary may not be reduced because of changes in the amount of work performed or because of changes in the quality of work performed.  Learn more about exempt employees here: Exempt vs. Non-Exempt Employees

May pay be deducted from an exempt employee’s wages?

Under the federal Fair Labor Standards Act (FLSA), employers may not deduct wages from an exempt employee’s wages due to partial day absences. However, an employer may deduct time from an exempt employee’s accrued Paid Time Off (“PTO”) or accrued vacation time for partial day absences.  State laws may differ from the federal guidelines and each state may have its own regulations.

In general, if a salaried employee performs any work during the workweek an employer must pay the employee their full salary amount. However, there are a few situations where deduction from an exempt employee’s salary is permissible under federal law:

• A workweek where an employee performs absolutely no work
• The initial or final week of employment (where the employee did not work the full workweek)
• Absences of one or more days due to personal reasons, other than sickness or disability, including vacation
• To offset amounts the employee receives from jury or witness fees
• For leave taken under Family Medical Leave Act (“FMLA”)
• Unpaid disciplinary suspension of one or more days in accordance with documented workplace policies

Where can you find out more?

• Permissible deductions and the impact of impermissible deductions: Exempt Employees – Deductions
• FLSA permitted deductions: FLSA – permitted deductions
• Deducting pay from exempt employees: Exempt Employees – Deducting pay
• Exempt vs. non-exempt employees: Exempt vs. Non-Exempt Employees