If a salaried exempt employee takes a day off, using their PTO, do we only pay them for 32 hours that week?

The answer is generally no. You must pay an exempt employee their regular salary for each pay period in which they perform any work. A key defining point to salaried positions is that they’re paid the same amount from one pay period to the next without reductions for variations in the quality or quantity of the work performed, according to the Fair Labor Standards Act (FLSA). This means that typically deductions for taking a day off aren’t allowed.

An exception to this rule exists under federal law when an employee is absent from work for one or more full days for personal reasons. However, paid time off (PTO), if provided by the employer, allows the employee to take time off from work but still get paid. In this instance, you might deduct 8 hours from the employee’s PTO balance, and their total pay remains the same.

Let’s dive deeper into PTO policy for employers wondering, “How does PTO work for salaried employees?”

Labor laws, exempt employees and PTO

If a salaried 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 nor their pay for that week, although it will cost them some PTO hours.

However, in a few instances courts have ruled that this practice essentially treats the exempt worker like a non-exempt wage worker as it impacts the “salary basis” requirement to maintain an exempt status, so be sure to check your state’s laws before adopting this practice.

What happens when a salaried exempt employee runs out of PTO? 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 any employment contract and employee handbook.

PTO policy for salaried employees

Federal law does not provide paid family or medical leave for all employees, but many employers offer paid time off for vacations, illnesses and personal time. Businesses find that personal days, sick time and other PTO greatly increase employee satisfaction. Paid time off is a valuable tool in recruiting talent and it also can boost productivity by improving the overall wellness of individual employees and by keeping sick employees from coming into work and infecting others.

It’s important to establish a clear PTO policy. Include your PTO policy in your employee handbook and update it regularly. Your PTO policies for salaried employees may differ from those for hourly employees, so you should make sure to differentiate those in your employee handbook. You may also want to review each employee’s nonexempt or exempt status before approving their PTO.

Clear communication about a salaried employee’s PTO balance can help eliminate tension in the workplace. It can also help ensure that workers use this benefit sensibly. As an employee diminishes their PTO balance, it can be helpful to remind them that further time off might mean unpaid time off.

TriNet offers our customers a time and attendance solution to help them track their employees’ hours and time off requests. The solution helps to simply the timecard process and provides an intuitive dashboard so they can manage their employees’ work schedules. To learn more on how we can help, visit TriNet.com.

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