Leave of Absence Not covered by FMLA
Posted: 16 January 2009 12:05 PM   [ Ignore ]
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A salary exempt employee has requested a shorter work day due to a medical condition.  She is not eligible for FMLA because she has not been employed for 12 months with the company.  The company does offer a LOA for employees who do not meet the qualification of FMLA.  Under FMLA, we could dock her pay for the shorter hours under FMLA regulation 29 CFR 825.206.  Since she would not be covered under FMLA, does the State of Pennsylvania allow us to reduce her pay for hours not worked without affecting her salary exempt status?

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Posted: 16 January 2009 12:39 PM   [ Ignore ]   [ # 1 ]
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To New Member:

Regarding exempt status: Take a look at the second bullet point below. You must reduce pay only by full day increments and then only if you have a bona fide sickness / accident plan, policy or practice. 

When can we deduct hours not worked from salaried employees?

Salaried employees may or may not be exempt from the wage and hour provisions of the federal Fair Labor Standards Act. If the employees are not exempt, you can deduct for any time not worked. If they are FLSA-exempt employees (administrative, executive, or professional employees, for example), you can’t deduct hours not worked, except if you can document that they:
• missed one or more full days for personal reasons other than illness or accident;
• were absent for one or more full days because of illness or accident, and you reduce the salary according to a bona fide sickness/accident plan, policy, or practice;
• received compensation for serving in the military or on jury duty and you reduce employees’ regular salary by that amount;
• violated a major safety rule, and you reduce employees’ salary as a good-faith penalty;
• received an unpaid disciplinary suspension of one or more full days imposed in good faith for infractions of workplace conduct rules;
• were absent for an entire workweek;
• did not work some days during the first or last week of employment; or
• took intermittent or reduced schedule leave under the federal Family and Medical Leave Act.
Generally, you can’t make salary deductions based on the quality or quantity of work employees perform.
Some states have laws that differ from FLSA. You should review state law for more information.

I did not find any contradictory information under Pennsylvania’s laws. However, legal counsel sounds appropriate in this case to be absolutely sure.  Perhaps reducing the salary for the time being is an easier remedy. However, the ADA may be at play here as well for this individual. You will want to consider that. Sometimes a shorter workday can be a reasonable accommodation.

Good luck!

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Posted: 16 January 2009 01:24 PM   [ Ignore ]   [ # 2 ]
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dfetty, your reluctance to dock the salary as permitted by the FMLA regulation is on target, as the employee does not qualify for FMLA. You have no choice but to follow the rules of 29 CFR Part 541. Joan provided an excellent synopsis of those rules (with regard to “salary basis”).

Joan also stated “reducing the salary for the time being is an easier remedy.” I agree, if that is plausible. I have seen brief reference to that option in one or two DOL opinion letters and/or in the 541 regulations (or possibly in the Preamble). If the reduced work schedule is only for a brief period of time (e.g., two or three weeks), a salary reduction is dubious; it could be interpreted as simply docking the salary illegally, and you risk loss of exempt status for this employee and possibly others. If the reduced schedule of hours is anticipated to be long-term (months, for example), I am quite sure that DOL would not question the legitimacy of establishing a new salary level for the employee. For example, if her salary is $1000 per week and her normal hours were forty per workweek, and now they are twenty - and expected to be twenty hours weekly for an extended period of time - a new salary of $500 weekly makes sense. The reduced salary can’t be less than the requirement in the regulation ($455 per week). In the example given, if the original salary were $800 per week, the new salary level would be $455 (not $400).

I am not aware of a specific formula as to how many weeks or months must be involved (of the reduced schedule of hours) in order to implement the above without a lingering concern that DOL (or the courts) might disagree. It’s a judgment call.

I believe that there is a DOL opinion letter about a similar scenario that approves reclassifying the employee to a nonexempt classification when the employment scenario has changed and that the new circumstances are expected to continue for an extended period of time. I would be even more cautious with this possibility than the approach discussed above, however.

I did not see J Sileo’s post prior to formulation of the above, as I had several interruptions while composing. He does make a very good point about utilization of leave or PTO hours. There is a common perception that leave banks must be charged only on a full-day or half-day basis, and that is not correct under FLSA (some state laws, notably CA, are more restrictive). I did not refer to the Wage and Hour Division Field Operations Handbook because the relevant chapter is based on the pre-1974 Part 541 (unless it has been recently updated). J Sileo is correct that the FOH does approve of the described salary reduction, however.

My post refers to FLSA rules only. If a state law provides for a standard that is more beneficial to the employee, or that otherwise places a higher burden on the employer, the state law must be followed. Based on Joan’s statement, that seems not to be the case in PA.

[ Edited: 16 January 2009 01:37 PM by Morris Jennings ]
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