FLSA2007-6 — Deductions for leave taken under a state’s Leave Act and section 13(a)(1)

U.S. Department of Labor
Employment Standards Administration
Wage and Hour Division
Washington, D.C. 20210

FLSA2007-6

February 8, 2007

Dear Name*:

This is in response to your request for an opinion concerning whether an employer may deduct
from the pay or accrued leave time of an employee who is exempt under Fair Labor Standards
Act (FLSA) § 13(a)(1)
1
for leave taken under your state’s Leave Act without affecting the
employee’s exempt status. Based on a review of the information provided, it is our opinion that
the employer may deduct full-day increments from an exempt employee’s salary for leave
taken under the Leave Act without affecting the employee’s exempt status. The employer may
also reduce an employee’s accrued leave balance for the time an employee is absent from work
even if it is less than a full day, provided the employee receives the full guaranteed salary.

You state that the Leave Act provides that “[a]n eligible employee shall be entitled to a total of
24 hours of [unpaid] leave during any 12-month period” to participate in a son or daughter’s
school activities, or to accompany a son, daughter, or elderly relative to routine medical or
dental appointments, or in the case of elderly relatives, other professional services related to the
elder’s care. Under the Leave Act, employees may take unpaid leave in partial or full-day
increments.

Section 13(a)(1) of the FLSA provides a complete minimum wage and overtime exemption for
“any employee employed in a bona fide executive, administrative, or professional capacity,” as
those terms are defined in 29 C.F.R. Part 541. An employee may qualify for exemption if all of
the pertinent tests relating to duties and salary are met. One such test requires that an otherwise
exempt employee be paid on a salary basis as described in 29 C.F.R. § 541.602. For purposes
of this response, we are assuming that the employees at issue meet all the general requirements
for the exemption. Our response is thus limited to whether the deduction from pay or accrued
leave time of an exempt employee defeats the salary basis requirement and, accordingly,
renders the exemption inapplicable.

As noted in § 541.602(a),

[a]n employee will be considered to be paid on a “salary basis” . . . if the employee
regularly receives each pay period on a weekly, or less frequent basis, a predetermined
amount constituting all or part of the employee’s compensation, which amount is not
subject to reduction because of variations in the quality or quantity of the work
performed. Subject to the exceptions provided in [29 C.F.R. § 541.602(b)], an exempt
employee must receive the full salary for any week in which the employee performs any
work without regard to the number of days or hours worked.

1
Unless otherwise noted, any statutes, regulations, opinion letters, or other interpretive material cited in this letter
can be found at www.wagehour.dol.gov.

One of the exceptions to the “no deduction” rule states that:

[d]eductions from pay may be made when an exempt employee is absent from work for
one or more full days for personal reasons, other than sickness or disability. Thus, if an
employee is absent for two full days to handle personal affairs, the employee’s salaried
status will not be affected if deductions are made from the salary for two full-day
absences. However, if an exempt employee is absent for one and a half days for
personal reasons, the employer can deduct only for the one full-day absence.

29 C.F.R. § 541.602(b)(1). Another relevant exception under 29 C.F.R. § 541.602(b)(7)
provides that:

[a]n employer is not required to pay the full salary for weeks in which an exempt
employee takes unpaid leave under the Family and Medical Leave Act [FMLA].
Rather, when an exempt employee takes unpaid leave under the [FMLA], an employer
may pay a proportionate part of the full salary for time actually worked. For example, if
an employee who normally works 40 hours per week uses four hours of unpaid leave
under the [FMLA], the employer could deduct 10 percent of the employee’s normal
salary that week.

The type of leave allowed under the Leave Act does not appear to constitute the type of leave
that would qualify under the FMLA. For example, the provisions of the FMLA do not apply to
leave taken by an employee to participate in his or her son or daughter’s school activities. See
29 C.F.R. § 825.112. We also note that under the FMLA, a covered employer may grant an
eligible employee unpaid leave “[t]o care for the employee’s . . . son, daughter, or parent with a
serious health condition.” See 29 C.F.R. §§ 825.112(a)(3), 825.114. Assuming, however, that
there is no “serious health condition” underlying the routine medical or dental appointment of
the employee’s son, daughter, or parent, leave taken for such a reason does not qualify under
the FMLA. Accordingly, the exception to the “no deduction” rule provided under 29 C.F.R.
§ 541.602(b)(7) does not seem to apply to leave taken under the Leave Act.

The Leave Act, therefore, appears to authorize leave “for personal reasons, other than sickness
or disability.” See 29 C.F.R. § 541.602(b)(1). Thus, an employer may make deductions from
an exempt employee’s pay for leave pursuant to the Leave Act only for full-day absences.
Partial-day deductions not expressly authorized by the Part 541 regulations may render an
employee’s compensation not on a salary basis, thereby jeopardizing exempt status. See 29
C.F.R. § 541.603

With regard to whether the employer may deduct from the employee’s accrued leave time for
leave taken under the Leave Act, it is our position that where an employer has a benefits plan
(e.g., vacation time, sick leave), it is permissible to substitute or to reduce the accrued leave in
the plan for leave taken under the Leave Act even if it is less than a full day without affecting
the salary basis requirement, so long as the employee nevertheless receives his or her
guaranteed salary. Where the employee’s absence is for less than a full day, payment of the
employee’s guaranteed salary must be made even if an employee has no accrued benefits (or a
negative balance) in the leave plan. See Wage and Hour Opinion Letter
FLSA2005-7 (Jan. 7,
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2005); 69 Fed. Reg. 22,122, 22,178 (Apr. 23, 2004) (“employers, without affecting their
employees’ exempt status, may take deductions from accrued leave accounts”).

This opinion is based exclusively on the facts and circumstances described in your request and
is given based on your representation, express or implied, that you have provided a full and fair
description of all the facts and circumstances that would be pertinent to our consideration of the
question presented. Existence of any other factual or historical background not contained in
your letter might require a conclusion different from the one expressed herein. You have
represented that this opinion is not sought by a party to pending private litigation concerning
the issues addressed herein. You have also represented that this opinion is not sought in
connection with an investigation or litigation between a client or firm and the Wage and Hour
Division or the Department of Labor.

We trust that this letter is responsive to your inquiry.

Sincerely,

Paul DeCamp
Administrator

* Note: The actual name(s) was removed to preserve privacy in accordance with 5 U.S.C.
§ 552(b)(7).
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