BPHR’s Director Lisa Salcido, SPHR, SHRM-SCP provides answers to your pressing HR questions.
Question: I will be processing payroll for our new salaried, exempt employee and this pay period includes Labor Day. Our company was closed for the holiday. According to our policy, new hires are not eligible for holiday pay until after 90 days of employment. Can I deduct his salary for Labor Day?
Answer: If your exempt, new hire worked any portion of the week, you may not deduct wages due to the holiday closure. Waiting periods for holiday pay eligibility are unlawful for exempt employees. The Fair Labor Standards Act (FLSA) salary basis requirement states that an exempt employee must regularly receive a predetermined amount of compensation each pay period. Docking a salaried, exempt employee’s pay could change their status to non-exempt, effectively making them eligible for overtime pay.
If an exempt employee works even just a portion of an hour of the workweek, a deduction cannot be made for an absence when no work is available, as in a holiday closure. However, if the employee misses work for one or more days due to illness or to attend to personal business and was not eligible for paid time off, that would be a separate situation from a holiday closure and a wage deduction would be permissible.
In contrast, hourly and non-exempt employees that do not perform any work, need not be paid during these holiday closures.
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DISCLAIMER: The material presented on this page is for informational purposes only and does not constitute legal advice or legal opinion.