I am sitting in my cozy living room, sipping coffee and watching CNN reports about a possible major snowstorm about to hit the northeast in the next few days. If the storm hits on New Year’s Day, there is no issue related to employer docking of exempt employee salaries. If the storm hits on Thursday, then certain rules apply and employers must take heed. Improper deductions from exempt employee salaries, even if done only to a few exempt workers, may adversely impact the exempt status of all exempts.

Allyson Kurker of Kurker Paget LLC just blogged on this issue and I think the message bears repeating. First, non-exempt employees may be docked more easily than exempts. Second, the DOL has issued guidance (a 2005 Opinion Letter) that outlines the parameters applicable to deductions. If the employer keeps the business open and an exempt employee does not come to work, the employer may make a full day pro rata deduction because the employee has voluntarily chosen to absent himself from work for “personal reasons.” Such a full-day, personal-reason deduction is allowable under the “new” i.e. 2004 FLSA regulations.

If the employer closes down, then no deduction can be made. This is because the employee (ostensibly) is ready and willing to come to work but due to the operating requirements of the business, i.e. bad weather, the employer has closed and therefore no work is available for the employee even though he is ready to work.

If the employer begins the work day open for business and then shuts down as the weather gets progressively worse, the rules change slightly. Although the employer may not make a cash deduction from exempt employee salaries for the few hours that are not worked in an early closing situation, the employer is allowed to compel the exempt employees to take hours from their banks of vacation or PTO time to “make up” for the work hours lost. Note, however, that if the exempt employee exhausts all such time, the employer cannot then make the above-referenced cash deduction from the salary.

Stay warm! Stay legal!

Happy New Year!