how to account for time off?
mk761
3 Posts
Hi. We're a small company with a basic HR manual and vacation policy. Our manual states that we don't allow for telecommuting. One salaried employee who's been with the company for several years has a family emergency and we're working out an arrangement where he will work remotely, on a part-time schedule, for a month (to be 100% clear, he will be offsite the entire month). I have two things iI need guidance with. ONE: for compensation, we will calculate his hourly rate based on his annual salary and pay him for every hour that he ends up working during that month. Does that seem fair? TWO: do we dock any of his vacation time? we want to be fair to the other staff. he gets 4 weeks of vacation. do we allow him to keep all 4 weeks to be used later in the year?
any advice would be greatly appreciated! thanks in advance!!
Comments
What state are you in? You need to check to see if you can require him to use all paid time off prior to using unpaid. Most states allow for it, but there are a few that allow the employee to have the choice (CA for one). That is our policy because the last thing we want is an employee to miss a lot of unpaid time to turn around and then ask for paid timeoff at a time where he/she needs to be back at work! Plus it does allow us to pay for the part of the day worked from regular wages and the rest from paid timeoff balances.
There is a difference between salaried and exempt/nonexempt. Is he exempt or non-exempt? That makes a huge difference!
By small, do you fall under FMLA regulations (50 employees within a 75 mile radius)? That will matter to the discussion.
If he is exempt you must pay him on any days where he does any work. You can dock his salary for any whole day he misses due to personal reasons. The only exemption is if this leave falls under FMLA. If it does, you can pay him prorated for the number of hours he actually works. Otherwise, there is no other way to deduct a partial day's wages. You CAN deduct partial days from vacation/paid timeoff balances without hurting the exemption. And yes, if I were paying him, I would deduct that from his paid timeoff/vacation time.
You can change him to non-exempt and pay him hourly. However, you can't just decide to change him back and forth willie-nilly. If this falls under F MLA protection, it also could possibly be seen as retaliation if there are negative consequences to no longer being exempt (other than the wage deduction issue that IS allowed under FLSA for docking exempts). This is the most dangerous of choices because anything you do is to the employer's advantage rather than the employees.
One other choice is to reduce his salary (to no less than $455 per week basis needed to keep the exemption) based on the number of hours you and he expect or agree that he will work while on leave, but keep him as an exempt salaried employee. However, by doing so, there is a good chance you are affecting benefits such as 401k deferral amounts and employer match, possibly life insurance and STD/LTD amounts should something happen.
If this doesn't fall under FMLA, you also have the choice of telling him that he can not telecommute and must take all the time as paid or unpaid timeoff and that he must be back in the office by a certain date. You could also tell him no, he can not have the timeoff beyond his vacation time. If you aren't large enough for FMLA, you might consider that you are setting a precedent on how you will handle non-FMLA leaves in the future. What benefit/policy are you willing to make for any employee? And what is special about this employee that he would get better treatment than another? You might also consider that you need to change your manual/policy on telecommuting so that it matches up to the decisions actually made.
thanks so much for your response! let me respond to the questions: we are in NY, he is exempt, we don't fall under FMLA regulations.
yes, we are very concerned with the precedent we are setting, so we need to make the best decision.
we do need him to work during his leave, so we can't say he can't telecommute and must use paid or unpaid timeoff for that period.
based on all of this additional info, which course of action do you recommend?
One out of the box idea --- count each day as a full vacation day since he has the four weeks. He will get full pay during those four weeks. Have him track his hours worked each week and add them back into his vacation balance up to a total of 8 per day (if that is what you would subtract if he took a whole day off). This stretches the amount of time he is getting paid. FLSA doesn't care about HOW he is getting paid, just that he is for any day he works.
(I did this years ago while exempt and on FMLA leave.....and was grateful that the employer was allowing me to work and to save some of my paid time and FMLA protected time til after my babies were born)
You then at least put off the issue for a full four weeks plus some extra time earned back. Once you hit a zero balance on his vacation time, though you will need to make another decision then. The good thing is that you will have seen in the 4+ weeks of how he is with telecommuting and if it is working for both sides. I telecommute 87 days out of 90 and it works for some people. Others it does not. If it is working, you will have stats on average how much he is working per week. You can then choose to either say no to more telecommuting OR you can decrease his salary going forward based on some % of what he is currently working vs what he worked in the past. (another good reason to have exempts clock-in on a regular basis...so that you know what that "past" is) Then when he stops telecommuting, you can take his salary back to 100%. But no matter what you would have to pay at least $455 a month (federal minimum for exempts) without proration.
I do not like switching people from exempt to non-exempt status when they must work part time. It creates the appearance that the job is a pay-for-time rather than a pay-for-ability position. Reducing salary is fine, but it should not be due to a reduction in time: it should be due to a reduction in duties the employee will be responsible for while he is away.
That creates a problem for vacation use. If you allow him to cash-out vacation, you have deferred income issues. If you don't allow him to cash out vacation, he's not going to be able to make up for the lost revenue.
An alternative is simply to leave his salary alone and tell him to account for his hours not worked, then deduct those hours from his vacation bank. FLSA is blind to where salary money comes from, it only cares that the salary amount is paid each week without regard for quantity or quality of work. Unless you have some reason to think the employee will seriously misrepresent hours worked, this is probably the best option. It creates a manageable way to deal with similar situations in the future. It protects your employee from serious financial harm and the drop in loyalty and in motivation that goesalong with that. It doesn't create a situation frought with complicated decisions that later can be leveraged into lawsuits (e.g., one employee's salary dropped 60% and another's only 55% under similar circumstances and the one whose salary dropped the most believes it was due to illegal discrimination).