Calculating exempt employee’s salary while on intermittent leave
Posted June 24, 2016
Karen was all set to get the payroll done by the end of the day when she ran across an issue. Dean, an employee, had indicated that he had taken a few hours of time off under the Family and Medical Leave Act (FMLA) during the week. Dean was exempt from the overtime provisions under the Fair Labor Standards Act, so he was to receive his weekly salary no matter how many hours he worked.
Karen was aware that the FMLA included an exception to this provision; that she could make deductions from an exempt employee’s salary for any hours taken as intermittent or reduced schedule FMLA leave within a workweek, without affecting the employee’s exempt status. Her issue, however, was calculating how much time Dean should be docked. He generally worked 9-10 hours per day.
While this is not directly addressed in the current regulations, as an employer, you (and Karen) have some options when determining an exempt employee’s compensation when taking FMLA leave on an intermittent or reduced schedule basis.
You may pay a proportionate part of the full salary for time actually worked. For example, if an employee would normally work 40 hours per week and used four hours of unpaid leave under the FMLA, you may deduct 10 percent of the employee’s normal salary for that week. Basically, you would keep the employee as salaried and make appropriate adjustments to the salary on the basis of the employee’s regular workweek and hourly rate. Simply apply the hourly rate to the missed hours in the workweek.
You could otherwise convert the exempt employee to hourly during the period that the intermittent FMLA leave is being sought. This method, however, could create concerns regarding how to determine the hourly rate for the exempt employee. Perhaps the pay statement indicates an hourly rate attributable to the compensation for the employee.
Otherwise, you would need to discuss the situation with the employee about what hourly rate you plan to apply, the rationale behind it, and the employee’s schedule. Then you would need the employee’s written agreement in regard to the rate and his regular schedule/hours.
As another option, you could simply continue to pay the employee his or her full salary when he takes intermittent or reduced schedule FMLA leave.
This article was written by Darlene Clabault of J. J. Keller & Associates, Inc.
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