With winter approaching, employers may be concerned about salary and time-off issues when employees don't report to work due to bad weather. The Department of Labor recently issued new advice:

  • Employers open for business may deduct from salary or banked leave for weather-related absences of one day or more.
  • Employers may not deduct salary when an exempt employee misses only part of one day because of bad weather.
  • When employers are closed due to bad weather, they can ask exempt employees to take vacation or use leave, but employers cannot insist on leave without pay.
  • Employers who regularly make improper deductions may lose their exemption for the affected employees. Employers with clear policies against improper deductions, who adhere to the policies in good faith, will not lose exemption unless they willfully violate the policies.

On November 9, 2005, the U.S. Department of Labor (DOL) released two opinion letters on the applicability of the Fair Labor Standards Act (FLSA) to salary deductions for exempt employees who are absent due to inclement weather.   Wage and Hour Opinion Letters FLSA2005-41 (10/ 24/05) and FLSA2005-46 (10/28/05).  In particular, the letters respond to the question of whether employers would violate the FLSA minimum wage and overtime rules by making salary deductions or requiring the use of banked leave for employees who miss work because of bad weather.

Under Section 13(a) of the FLSA, an employee is exempt from overtime when employed in a bona fide executive, administrative, or professional capacity.   The DOL relies on tests relating to duty, salary level and salary basis to determine if an employee qualifies for overtime exemption.  One such test requires that exempt employees be paid on a salary basis, meaning that the employee regularly receives a predetermined amount constituting all or part of his compensation each pay period.  To qualify as a “salary basis,” this amount cannot be subject to reduction because of variations in the quality or quantity of the work performed.  29 C.F.R. §541.602(a). 

Under the FLSA, an employer may make deductions from salary or banked leave when an exempt employee is absent from work one or more days for personal reasons other than sickness or disability.   29 C.F.R.§ 541.602(b).  An employee who is absent due to inclement weather is absent for personal reasons.  According to the DOL, a private employer that is open for business in inclement weather may make salary deductions for full-day weather-related absences without jeopardizing exempt status.  In the alternative, the employer may require the employee to take vacation or banked leave when the employee is absent for one or more days.

When the employer itself is closed due to inclement weather, it can ask exempt employees to take vacation or use leave, but it cannot insist on leave without pay.   The employer must pay the employee’s full salary even if the employee has no accrued vacation or other leave balance.  This is in keeping with the FLSA rule that if an employee is ready, willing, and able to work, deductions may not be made for time when work is not available.  29 C.F.R. §541.602(b)(2). 

Because DOL Regulations do not permit deductions from salary for less than a full day’s absence, no deduction may be made when an employee misses only part of one day because of inclement weather.   In the case of partial day absences, employers may ask exempt employees to take vacation or use leave for the time missed, however, they cannot insist on leave without pay.

Finally, the DOL letters emphasize the importance of adhering to FLSA salary deduction rules.   The Regulations provide that employers with an actual practice of making improper deductions may lose their exemption altogether.  However, if an employer has a clearly communicated policy prohibiting improper deductions that includes complaint and reimbursement mechanisms, and the employer adheres to such policy in good faith, the employer will not lose the exemption unless it willfully violates the policy, e.g., by continuing to make improper deductions after receiving employee complaints.  29 C.F.R. §541.603(d).