If a salaried exempt employee takes a day off, using their PTO, do we only pay them for 32 hours that week?
Paid time off (PTO) means your employee is paid for the time that they’ve taken off.
The answer is, no, you must pay the employee for a full 40 hours for the week. It’s called paid time off (PTO) because the employee is paid for the time that they’ve taken off. You can deduct 8 hours from their PTO balance, but the total pay remains the same.
If you’re a Zenefits customer, you can use the free PTO product for employee time tracking. Let’s dive deeper into PTO policy for employers wondering, “how does PTO work for salaried employees?”
Only specific situations will allow you to dock a salaried employee’s pay for taking hours or even a partial workweek off. A key defining point to salaried positions, as defined by the Fair Labor Standards Act (FLSA), is that they’re paid the same amount from 1 pay period to the next without reductions for variations in the quality or quantity of the work performed. This means that typically deductions for taking a day off aren’t allowed.
Labor laws for salaried exempt with PTO employees
If a salary exempt employee has PTO as part of their benefits package, generally you can require them to use it to cover their absences. This doesn’t impact their exempt status because, though it costs some PTO hours, it won’t change their total monetary compensation.
However, in a few instances courts have ruled that this practice essentially treats the exempt worker like a non-exempt wage worker, so be sure to check your state’s laws before adopting this practice.
Deductions of pay are permissible under FLSA regulations if your exempt, salaried employees have exhausted their PTO benefits. Of course this should be stated clearly in the employment contract and employee handbook. Deductions are also permissible for personal time taken off, provided it doesn’t involve sickness or disability leave.
What employers need to know about state paid leave laws
Each state has its own set of paid leave laws. In some instances, vacation time and paid sick leave are considered separate. Other states combine all paid leave under the same umbrella. In those cases it applies whether an employee takes a vacation day, personal leave, or asks for sick leave. For example, in Maine, employees can use their paid vacation time for any reason at all.
Most local regulations apply to an hourly employee, usually working minimum wage, and paid time off is accrued based on hours worked. The maximum accrued vacation time earned per year differs from state to state.
More PTO considerations for employers to keep in mind
If you hire both salaried and hourly employees, it’s important to establish a clear PTO policy. Your PTO policy should be included in your employee handbook and updated regularly. You may also want to review each employee’s nonexempt or exempt status before signing off on PTO.
Clear communication about a salaried employee’s remaining PTO can help eliminate tension in the workplace.
Clear communication about a salaried employee’s remaining PTO can help eliminate tension in the workplace. It can also help ensure that workers use this employee benefit sensibly. As an employee uses up their paid leave, it can be helpful to remind them that further time off might require unpaid leave.
If a salaried employee is struggling with being in office, it’s possible to keep their salary and hours the same without resorting to PTO and unpaid time off. Instead, an employer can offer hybrid or remote work options. This can be extremely beneficial for both an exempt and nonexempt employee that uses a lot of sick leave due to being the primary caregiver for a family member or someone dealing with a chronic illness.
How should employers handle PTO in these cases?
If your salaried employee uses PTO to cover an absence, their pay for that period shouldn’t change.
This article has been updated.