Corona Virus and Salaried Employees

In order to discuss this situation, it is important to understand the law that governs this issue.

Under the Fair Labor Standards Act, in order to classify a position as “exempt”, it must meet 3 tests:

1. Salary Level Test – As of 1/1/2020, the Dept. of Labor issued new laws that require employers who wish to maintain or place employees into Exempt positions, must pay the employee at least $35,568 per year.  There are a few exceptions to this rule (especially in CA), so if you have questions, please call one of our HR professionals
2. Duties Test – An exempt position usually falls into 3 general job types:
   1. Executive – The employee manages the company or a division/department of the company AND supervises 2 or more FTE (full time equivalent) employees
   2. Professional – Their primary duty is performing work requiring advanced knowledge which is predominantly intellectual in nature and requires the exercise of discretion, judgment and advanced knowledge in a field of science, learning or creativity.
   3. Administrative – Their primary duty is performing office or non-manual work directly related to the management or general business operations of the employer and includes the exercise of discretion and independent judgment “with respect to matters of significance” to the company or its customers.
3.  Salary Basis Test – Regardless of quality or quantity of work, with very few exceptions, the exempt employee must receive a fixed salary amount every payroll period that is NOT subject to fluctuation.  The Dept. of Labor doesn’t care how an employer makes an exempt employee’s paycheck whole as long as the regular salary amount does not fluctuate.  So, the money can come out of a “payroll” bucket or a “Vacation” bucket or a “Sick” bucket, the DOL doesn’t care.  This becomes an internal accounting function, however, there are some legitimate reasons for “docking” an exempt employee’s time:
   1. When an exempt employee is absent from work for one or more full days for personal reasons and does NOT perform any work
   2. When an newly hired exempt employee has not met the eligibility requirements of a PTO/Sick policy, but takes a “sick” day(s) and does NOT perform any work
   3. When an exempt employee has exhausted his/her PTO/sick hours and takes a “sick” day(s) and does NOT perform any work
   4. For penalties imposed for violations of safety rules of major significance
   5. To offset any amounts an employee receives as jury or witness fees, or for military pay.
   6. For unpaid disciplinary suspensions of one or more full days imposed in good faith for violations of workplace conduct rules
   7. Deductions for partial weeks worked during the initial or final weeks of employment.
   8. When an employee works a reduced or intermittent work schedule under the Family and Medical Leave Act (FMLA)

For exempt employees who take sick time off, here is the bottom line:

1. If the employee takes time off for the flu, a cold, the Corona Virus and he/she has hours in their PTO/sick bucket, those hours can be used to make the salary “whole”.
2. If the employee is not eligible for PTO/sick yet because they are new to the position and the employee does NOT perform any work on a given “sick” day, the employer can “dock” the exempt employee’s pay for the number of days absent.
3. If the employee has exhausted his/her PTO/sick allotment and does NOT perform any work the employer can dock the employee’s pay for the number of days absent.

NOTE:  In examples 2 and 3 above, the employer should inform the employee that the time off will be without pay and that the employee is NOT to conduct any business while out sick.  This means no business emails, no business phone calls, no business texting.  If the employee responds to even one business email, text or phone call, the company owes the employee for that day’s salary.

Obviously the company can be as generous as it wants to be but the above information is the bare minimum to meet federal standards.

It is also important to remember that for those of you with 50 or more employees, the Family and Medical Leave Act (FMLA) will certainly be a consideration.

This is a tricky mine field with lots of moving part.  Please call if you have any specific questions.

Thank you for reading!