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Docking Time From an Exempt Employee’s Leave Bank — Is It Permissible?

Posted by Marc Smith | Apr 26, 2010 | 0 Comments

Under the Fair Labor Standards Act (“FLSA”), which governs the payment of minimum wage and overtime compensation, certain employees are considered “exempt” from the FLSA's overtime and minimum wage requirements.  In order to qualify for “exempt” status, an employee must not only fit within one of the recognized exempt job classifications (such as executive, professional or administrative employees), but also must be paid on a salary basis.

Under the FLSA, an employee is paid on a salary basis if the employee regularly receives each pay period a predetermined amount that is not subject to reduction because of variations in the quality or quantity of work performed.  Subject to certain narrow exceptions, an exempt employee must receive his or her full salary for any week in which the employee performs any workregardless of the number of days or hours worked.

Despite these restrictions, employers can make deductions for absences from an exempt employee's leave bank (i.e. vacation or PTO) in hourly increments, so long as the employee's salary is not reduced.  If an exempt employee receives his or her full salary, deductions from the employee's leave bank, whether in full or partial day increments, do not affect exempt status.  Caveat:  Once an employee's leave bank is exhausted, it is NOT permissible to dock the employee's salary.  

About the Author

Marc Smith

Marc J. Smith is a Rockville, Maryland employment attorney and a founding member of the law firm formerly known as Smith, Lease & Goldstein, LLC. In 2018, after 18 years managing Smith, Lease & Goldstein, LLC's employment counseling and litigation practice, Marc launched his own boutique practice...

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Representation Of Employers And Employees

The Law Office of Marc J. Smith, LLC is a boutique employment law practice based in downtown Rockville, Maryland near the Montgomery County Circuit and District Courts. The Firm’s practice focuses exclusively in the employment law arena and provides counseling, litigation and a wide range of other employment-related services to employers and employees throughout the State of Maryland, Washington D.C. and other jurisdictions. The Firm also represents individuals who have failed to register with the Selective Service System and who are trying to apply for or maintain federal employment.

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