Hi Evil HR Lady,

I am an exempt employee (recruiter/sales) and never get paid overtime. Our evil admin lady is a real clock watcher and wants to deduct from our sick and or vacation time anytime we are out of the office “unaccounted for”.

For example one day I took my wife to work and was 30 minutes “late”. That is I arrived at 8:30am instead of 8:00am. I called in and the people that count knew where I was. However Evil Admin lady deducted 30 minutes from my vacation time. That very evening I worked until 7:00pm. And I was on call for the whole week taking phone calls at night and on the weekend. Over course I did not get paid for any of this – but had to cop a deduction in my vacation time.

I understand that an employer can set schedules – even for exempt employees – but is this behavior illegal or just annoying?

My vote? Illegal.

My second vote? Stupid too.

Now, my lawyer friends may jump in and correct me if I’m wrong, but I don’t think so. You can be disciplined or fired for being late. You can get a lousy performance rating and given all the lousy assignments. But, you can’t have your pay docked.

My source for all this is our very own US Department of Labor. Here are some dull quotes from them:

Being paid on a “salary basis” means an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work. Subject to exceptions listed below, an exempt employee must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked. Exempt employees do not need to be paid for any workweek in which they perform no work. If the employer makes deductions from an employee’s predetermined salary, i.e., because of the operating requirements of the business, that employee is not paid on a “salary basis.” If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.

Now that you didn’t read that brilliantly written paragraph, I’ll put it into bullet points for clarity:

  • Salary cannot be reduced due to reduced quantity or quality of work
  • You must receive a full week’s pay if you perform ANY work during that week (there are a few exceptions, such as if you quit on Monday, they don’t have to pay you for the whole week)
  • If the employer makes deductions then you are not “salaried” and are therefore eligible for overtime
  • Even if there is nothing for you to do, you must be paid if you are willing, ready and able to work.
  • The technical language is all spelled out at the above link. The administrator likes her little power game. Your company doesn’t wish to pay you, and everyone else she does this to, overtime. Talk to HR. If they don’t care, present them with a bill for the overtime you are due.

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10 thoughts on “Exempt Pay Deductions

  1. Slight fly in the ointment of an otherwise perfect analysis. Salary was not “docked”. Vacation allotment was reduced, but not salary. If you run out of PTO and salary is docked, then FLSA is violated. Still agree with “stupid” analysis.

  2. I was always under the impression that setting a schedule for an employee was a primary determinant that a position was non-exempt. An exempt employee can’t be “late” for work.

    I suggest looking for a new job as well. It is unlikely that your evil admin is doing this without management approval (as Evil HR Lady points out). Your bill will be ignored. Any changes will have to be forced upon the employer.

    As I have said before. Everyone needs a job, but don’t “need” the one you have. Find options and use them.

  3. It’s not necessarily illegal to dock a salaried, exempt employee’s pay for time missed from work, but it very well might jeopardize that employee’s exempt status, which could cause a whole bunch of other illegal consequences, such as unpaid overtime.

  4. Michael–
    I knew someone was going to say that. I guess it depends on how your vacation policy is written and what state you live in. In California, vacation is considered earned salary so it must be paid out if you quit. By docking vacation pay you are docking salary.


    An exempt employee can be late, but the punishment can’t be docking pay. It can be firing, though.

  5. The policy at my employer, an entity only beholden by federal law, is that for exempt workers, vacation/sick pay can only be taken/charged in full day increments. So if I come in for two hours and then leave, I still get a full days pay. If I call in sick, I’m charged with 8 hours sick time.

    If I do the first (come in for two hours and leave) repeatedly, then other disciplinary actions such as a write-up, suspension up to termination may occur.

    I don’t know if my employer does this because it’s law or just their policy, or what.

    Beyond the federal labor codes, I’d also check the labor codes for your state, which may be more specific.

  6. Why is the Evil Admin Lady tracking your time? If I were you my first question would be to my boss, “Is Evil Admin Lady in charge of tracking my time? The reason I ask is because [insert paragraph 2 of your email to Evil HR Lady]”

    As an HR Dept of one not only do I have WAY more things to do than track people’s time, I don’t consider it my job. Employees have direct managers who are in charge of that.

    Just my $0.02

  7. Exempt workers are by the nature of their work, exempt from overtime and other FLSA regulations, because their contributions to the work place are not limited to the time they spend actually “on the job.” They supply intellectual benefits to their employers, regardless of whether or not they are on the premises.

    For example, I am solving work related problems when I am in the shower, thinking about work related issues during dinner time, and, I hate to admit it, even in my dreams – at times.

    Therefore, we are not compensated for the time we are physically on the premises, but for our intellectual involvement and contributions to our jobs, regardless of where our physical presence may be.

    This is a reflection of the very poorly worded law; and one that is taken advantage of all the time by employers. One of the best examples of smart employees seeing the obvious opportunity of employers taking advantage of the loophole is IT employees in CA. They chose to make themselves unexempt, so they were qualified for overtime, etc.

    If you think about it, wouldn’t you rather be non-exempt, and be paid for all the time you actually spend working for your company, no matter where your body is? If most non-exempt folks truthfully added up the hours they spend “working” whether on their Blackberrys or checking their email when away from their offices, they would be making much less than the annual salary we pull down, to an embarassing extent.

  8. If you want to really hurt them after you leave (I would suggest leaving no matter what), then document all this – preferably getting a statement in writing from hr lady – just to ‘ensure accuracy of the deductions’ – without in any way criticizing. Then after you leave report them to the state tax, federal tax and state employment boards for violation of exempt/non-exempt status – and apply for unemployment and reimbursement of taxes. You might actually get some money (unlikely) but THEY will get an audit – a nasty, painful audit that will hurt the hr person the worst. They may even end up having to backtrack the whole mess and pay everyone out properly.

    But don’t rock the boat or complain – just nicely get little written documentation – until you leave.

  9. Having read all this, how does work for example in NJ. Looked it up and employer does not have to pay out or even offer vacation time.

    I’m an exempt employee.

    Can employer deduct time from my PTO bank if I come in 30 min late or leave an hour early etc.

    These deductions are just from my PTO bank, not my actual salary

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