Handling half days off: Exempt vs. Nonexempt

What do you do when an employee wants a half-day off? You are probably thinking to yourself “That has got to be the dumbest question Haberman has ever asked.” In reality it is not quite as straight forward as you think, because you have two classes of employees, exempt and nonexempt, that have different answers. How you handle half days off for exempt employees is different than how you handle it for nonexempt employees.
With nonexempt employees it is easy. According to the FLSA they only have to be paid when they work, so they may take partial unpaid vacation days any time an employer authorizes the time. But it is not so easy with exempt level employees and how you handle it may run you afoul of the Fair Labor Standards Act. Basically in the private sector employers that make deductions from exempt employees’ pay for absences  of less than a day may jeopardize their exempt status under the FLSA. This may expose the employer to liability for any overtime worked by the  employees.
Let’s review. Exempt employees are exempt from the FLSA’s minimum wage and overtime requirements because of the nature of their job duties and the fact that they are paid on a salary basis. The term “salary basis” is defined by the FLSA regulations as the payment on a weekly or less frequent basis of a predetermined amount that constitutes all or part of compensation, without reductions for variations in the quality or quantity of the work performed. Under this definition, exempt employees generally must receive their full salary for any week in which they perform work, without regard to the number of days or hours worked. 
Generally if the exempt employee has paid vacation available you can require them to use paid vacation for partial day absences. This may safeguard the exempt status since this does not reduce the employee’s compensation. The Department of Labor (DOL) generally has considered this type of arrangement permissible. In the comments to the current regulations the DOL specifically restates this position acknowledging that employers may make deductions from exempt employee leave accounts without jeopardizing the employee’s exempt status. Several courts have adopted this position, although a few have disagreed. Those that disagree have determined that this practice, even without an actual loss of pay, treats the exempt employee like an hourly, nonexempt employee and, therefore, triggers loss of the exempt status. So you need to understand the state law where your business resides.
If an exempt employee has taken all their vacation or other paid time off the FLSA regulations do allow docking of exempt employees for full day absences taken when the employee has exhausted paid leave. Specifically, deductions are allowed for absences from work of one or more full days for personal reasons, unless those days are for sickness or disability. As an example, if the employee is absent for two full days to handle personal matters, those two days may be deducted from the employee’s salary without having an effect on the exemption. If you have a bona fide plan, policy, or practice that provides compensation for loss of salary as a result of sickness or disability you may make deductions for a full day’s absence due to illness or injury. But if you had no such plan you cannot make these deductions.
According to the FLSA regulations:
29 CFR 541.602(b)(2):
(2) Deductions from pay may be made for absences of one or more full days occasioned by sickness or disability (including work-related accidents) if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by such sickness or disability. The employer is not required to pay any portion of the employee’s salary for full-day absences for which the employee receives compensation under the plan, policy or practice. Deductions for such full-day absences also may be made before the employee has qualified under the plan, policy or practice, and after the employee has exhausted the leave allowance thereunder. Thus, for  example, if an employer maintains a short-term disability insurance plan providing salary replacement for 12 weeks starting on the fourth day of absence, the employer may make deductions from pay for the three days of absence before the employee qualifies for benefits under the plan; for the twelve weeks in which the employee receives salary replacement benefits under the plan; and for absences after the employee has exhausted the 12 weeks of salary replacement benefits. Similarly, an employer may make deductions from pay for absences of one or more full days if salary replacement benefits are provided under a State disability insurance law or under a State workers’ compensation law.
There is however, a simple solution to problem of exempt employees taking half days off. JUST LET THEM DO IT. Generally they are working  more than 40 hours a week anyway. (If not, then you have another issue perhaps.) So if they need an occasional afternoon or morning off give it to them. After all, you are most interested in their productivity not their attendance. Or at least you should be.

23 thoughts on “Handling half days off: Exempt vs. Nonexempt”

  1. This post is so timely… yesterday I was working with a client on this issue. The majority of his senior staff are exempt and have been grossly taking advantage of being exempt. We rollout a policy change yesterday and it was amazing the response. People were generally disappointed that time off was now only authorized in half day increments for exempt employee… I have a feeling the disappointment is coming from those who have been working 6 hrs and being paid 8… my goal was to make sure my client was complaint with FLSA regs and my hope is that the change make them think twice before taking time off… great read!

  2. My advice to exempt employees who report to me is if you take three or less hours off during a day, report a full day of work. (My presumption with that guideline is that if they take more than three they are taking four hours.)
    A greater difficulty, in my opinion, is the challenge of salaried employees who are NOT exempt not understanding that exemption is not a “privilege” but a compensation for those employees who, by virtue of responsibility or work demand, do – generally – spend more than 40 hours a week making sure the organization is functioning properly.

  3. I read a lot of interesting content here. Probably you spend a
    lot of time writing, i know how to save you a lot of time, there is an online
    tool that creates readable, SEO friendly posts in minutes, just search
    in google – laranitas free content source

  4. If you think about it in terms of compensation and not salary you should not have to take PTO time off for time for less than 1 day. PTO time is clearly part of your compensation just like your 401k and insurance benefits. The reg defines salary as predetermined payment that constitutes all parts of compensation. What is next reducing medial and 401k benefits of salaried employees who are gone for less than 1 day. Sadly the DOL does not read the reg this way, and says employers can require salaried employees to take PTO time for less than one day, the courts are mixed as to how it should be handled.

    • Wondering if anyone has any further clarification on this as I have heard that if a Salaried (Exempt) employee has worked more than half a day (4 hrs) they should be paid the full day. However, I have a case where an employee is being required to use 4 hours of PTO if leaving later in the day (6 hours into shift) due to falling ill or because of an appointment.
      in Utah, thoughts feedback appreciated.

  5. Hi. How about if an employee has only 5.75 hours of vacation time? Does he get paid a full day if he doesn’t work? For example, the last day of the pay period he doesn’t work. He has 5.75 hours of vacation time that are used. Is his salary reduced for 2.25 hours? I understand if he worked 5.75 hours he would be paid a full day. But, its unclear about partial time bank days when they don’t work.

  6. My questions is that if I am considered an exempt employee who is generally “scheduled” to work a 40 hour work week, 8 hour days. Now I understand that working over 40 I am not entitled to overtime. That is part of being exempt.
    However, let’s say I work a 13 hour day on Monday, do I have to work 8 again the next or may I come in work 4 hours? Totaling for the week 40 hours.

    • Chris, as an exempt employee you are required to work whatever hours your employer desires you to work. If you work a particularly hard day and want to shorten the next day will all depend on your employer and their point of view on flexibility. Ask them, or don’t ask for permission, but seek forgiveness if they complain.

  7. I have a specific example that I am still not clear on. I am an exempt employee and am required to work 45 hours in one work week (9 hours a day).
    – question 1: If I only work 8 hours on Monday, can my employer require me to take 1 hour of pto to cover that time. I ask this because if I work 8 hours on Monday that is below the office requirement, but equal to the standard California 8 hour work day. Similarly, my total work week would be 44 hours (above the 40 hr California standard, but below my office standard of 45 hrs).
    – question 2: I have acrued at total of 3 sick days. If i become sick one day and decide to take 3 hours off (work a total of 6 hours), can my employee deduct 3 hours from my total sick days. Or, since this is not a full day out, will I still have 3 sick days left.
    Thank you

    • Sorry for the late reply Sal. If you are truly an exempt employee you can be required to work whatever hours are required. I am not up to date on California law, so I would check with an attorney in California. You may want to check if you are truly exempt.

  8. The issue that is never addressed is when an employee comes in 1.5 or 2 hours late due to a medical appointment and then stays late, working 9 or 10 hours, but the employer still deducts from personal time. I cannot figure out whether that is allowed.
    Or when an employee has taken a day off, but still clocked over 40 hours and the employer deducts personal or vacation time for that day.

  9. I work 4 hour one day and took the 4 in vacation my supervisor try to tell I was wrong to call in sick the next work day despite the fact I had to do my job and someone else’s before leaving. Union

  10. I am a salaried + bonus account executive in MD. My base is 57k.
    I recently took all of my PTO for Christmas, however it only covered 10.38 hrs for the final week of my vacation. I returned on that Friday and worked a full day putting me at 18.38hrs for that week. The following paycheck I received was 21.62hrs short as if I were an hourly employee being paid at a rate of $27.40. This was discussed and I reluctantly agreed (no signed contract, just an email) not knowing my rights as an exempt employee. Now that I am aware of the law, I am furious.
    We are now in slow season, however through our busiest time of year I sometimes work 60-70hr weeks
    including weekends, overnights and some holidays.
    I am wondering if I have any legal precedent at this time.
    -Thank You

  11. We have exempt employees and out policy says they are required to work at least 40 hours per week. We have been told if we come in and work 2 hours we need to use 4 hours of pto, if we work 6 hours dont charge pto. If we take off a full day but have already put in 40 hours we are required to charge 8 hours to their pto. Is this correct is seems like you are punishing the exempt employee.

  12. We have exempt employees in our organization. In a case where the employee works less than 4 hours on a particular day, some take a half day of vacation and some do not. We’d like everyone to only use vacation if they are taking a full day off. However some of the employees have a guilty conscience if they are not putting in a full day so they submit a half day of vacation leave:). What language could we add to our policy to strengthen/clarify that our policy is you do not need to use vacation time unless you are taking a full day off?

    • Wondering if anyone has any further clarification on this as I have heard that if a Salaried (Exempt) employee has worked more than half a day (4 hrs) they should be paid the full day. However, I have a case where an employee is being required to use 4 hours of PTO if leaving later in the day (6 hours into shift) due to falling ill or because of an appointment.
      in Utah, thoughts feedback appreciated.

  13. When do the new provisions of flsa take affect?
    Also if I’m exempt and might have a week that I do 38 hours but have more weeks where I do 45. Can my employer take 2 hours of my vacation time?

  14. I work in WA state and am an exempt employee. I worked for one bank and that time and attendance platform said if youe are exempt to only document time off in full day increments. I now work for another bank in the same state and they require PTO to be used for half day’s off. Why is it different? If I work an extra four hours during the week I don’t get paid more so why should I have to use PTO for working four hours less? Seems like exempt employee’s are being taken advantage of in my view.

Leave a Comment

Pin It on Pinterest