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May 12, 2010
Salary Deductions That Will Not Impact Exempt Status

In a BLR webinar titled "Reducing Overtime Costs: What You Legally Can—and Can't—Do to Keep Workers at Their Straight-Time Rates," Laura P. Worsinger, Esq., discussed the types of salary deductions that can be made without jeopardizing an employee's exempt status.

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Salary deductions are allowed for one or more full days an employee takes off for the following reasons:

  • To handle personal affairs
  • To go on unpaid family or medical leave under the Family and Medical Leave Act (FMLA)
  • For disability or illness, if employer has a plan (such as disability insurance or sick leave) that compensates employees for this time off
  • To serve on a jury, as a witness, or on temporary military leave (but the employer may deduct only any amount that the employee receives as jury or witness fees or as military pay)
  • During the employee's first or last week of work, if the employee does not work a full week
  • As a penalty imposed in good faith for infractions of major safety rules (not in California); and
  • To serve an unpaid disciplinary suspension imposed in good faith, if the employer has a written policy regarding such suspensions that applies to all employees (not in California).

Partial-Day Absences for Exempt Employees

While it is impermissible to deduct from a salary for partial-day absences, the company may deduct from leave time balances in connection with absences due to vacation or sickness of less than a full day under a bona fide plan providing for such leaves without the employee losing his or her exempt status.

Laura P. Worsinger, Esq. is Of Counsel with the Los Angeles office of Dykema Gossett PLLC. She has broad counseling and litigation experience and specializes in the defense of employers in individual and class actions involving wage and hour violations, misclassification, discrimination, wrongful termination, and other employment-related proceedings. She can be contacted at

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