Q: An exempt employee is planning to take time off leading up to a holiday, despite having already exhausted all of their accrued PTO.

They claim that, as an exempt employee, they are entitled to receive a salary even when absent. May we dock this employee’s pay, without impacting their exempt status?

A: Yes. While both state and federal law include strict limitations on when an employer may dock the pay of an exempt employee, you have described one of the exceptions to the general rule.

That general rule requires that exempt employees be paid on a “salary basis,” meaning they receive a predetermined amount for each pay period—regardless of the number of days or hours worked—which is not reduced due to variations in the quality or quantity of the work performed.

Thus, as your employee pointed out, an exempt worker will often be entitled to their regular paycheck, even when they work fewer than typical hours.

If an employer inappropriately docks such an employee’s pay, it risks losing that employee’s exempt status, thereby entitling the employee to overtime compensation.

However, there are limited circumstances in which an employer may dock an exempt employee’s pay without risking the worker’s exempt status.

Those circumstances are:

• When the employee performs no work during the work week
• During the initial and final weeks of employment, when an employer may pay a proportionate part of an employee’s salary for the time actually worked
• When an employee is absent for one or...

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