exempt employee

Does an exempt employee participate in vacation/sick leave policies? If so, what happens when they use it up if we cannot dock exempt employee pay?

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  • They can participate if you want them to and assuming you have a bona-fide program for employees to use........once the exempt person has exhausted their accrued balances, you may deduct for time that was previously paid as vac, sick, etc.......
  • The exempt employee needs vaction to take a block of time off with pay (for example a week or 3 days).

    The problem is partial days -- you cannot dock for them. But the vacation and sick pay will be very important if the exempt employee needs a few days off.


  • When an exempt employee uses all their paid time off, you cannot dock their pay - but you can discipline them for attendance policy violations or performance failures. Just be alert for situations that can trip you up, like FMLA and ADA on attendance; and discrimination and harassment for performance. Exempt does not mean exempt from all company policies.
  • You can dock an exempt employee's pay in full day increments IF you have a bona-fide time off plan in place and the employee has exhausted all time. The risk you run when doing this is that if the employee is one who puts in long hours, weekends, etc. for no extra pay, you will demotivate him/her and they may not be so willing to give the extra effort.
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