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Exempt vs. Non-Exempt Time Off Requests

Exempt vs. Non-Exempt Time Off Requests

Understanding the differences and the nuance between exempt vs. non-exempt time off requests could save your company time, money, and a potential costly lawsuit.  The rules and regulations governing exempt vs. non-exempt employees and their specific rights under the law are governed under the Fair Labor Standards Act.

Understanding the nuances of the law is also important in ensuring that you provide an accurate and fair wage model to your employees and staff.  Paid time off is one of the major benefits an employer can offer their employees and staff and providing accurate time off is essential to establishing yourself as a fair and honest employer.

What is the Fair Labor Standards Act?

The Fair Labor Standards Act (FLSA) is a United States labor law that passed in 1938.  Under the Fair Labor Standards Act, the law creates a right to a federal minimum wage rate and a time-and-a-half overtime pay for specific employees.

In addition to the above, the Fair Labor Standards Act prohibits the employment of minors in certain fields of work and industries.  While the Fair Labor Standards Act does regulate a minimum wage and the prohibition of minors in working certain fields and industries, it does not cover all aspects of employment.  For example, the FLSA does not require the below:

  • Vacation, holiday, severance, or sick pay
  • Meal or rest periods, holidays off, or vacations
  • Premium pay for weekend or holiday work
  • Pay or fringe benefits
  • Discharge notice, reason for discharge, or immediate payment of final wages to a terminated employee

What is an Exempt Employee?

An exempt employee is employed in direct contrast to a non-exempt employee.  An exempt employee is a term that simply refers to a category of employment that is set out under the Fair Labor Standards Act.  Exempt employees do not receive overtime pay nor do they qualify for a minimum wage.  Essentially, an exempt employee is one who is salaried and therefore exempt from certain benefits.

In general, exempt employees are considered to be employed in more professional settings.  These include administrative, executive, sales, and computer related roles.  In order to qualify as an exempt employee, an individual must be salaried and maintain a weekly salary of at least $684.  Annually, this comes out to $35,568.

Exempt vs. Non-Exempt Time Off Requests

What is a Non-Exempt Employee?

A non-exempt employee, as compared to an exempt employee, are ones who are entitled to earn the federal minimum wage under the Fair Labor Standards Act.  In addition, these employees qualify for overtime pay, which is calculated as one-and-a-half times their set hourly rate.  Overtime pay is generally considered to be any work completed beyond the standard 40-hour workweek.

In general, non-exempt employees are considered to be employed in less-professional, more blue-collar professions.  This includes construction, manufacturing, maintenance, and mining. As a non-exempt employee, these individuals are typically managed and supervised in a hierarchical manner and report to higher-ups.  Non-exempt employees are expected to carry-out their duties without interjecting their own management decisions.

Non-Exempt Employees Time Off Requests

As non-exempt employees are paid an hourly wage, their attendance is considered of utmost importance when it comes to pay.  In essence, for each hour worked, a non-exempt employee must be paid a minimum wage and for any hour over a standard 40-hour workweek, the non-exempt employee must receive a time-and-a-half rate for their work.

For this reason, a request for time off or absenteeism results in a direct deduction of wages for the week.  For example, if a non-exempt employee works a normal 40-hour workweek at an hourly wage of $11, they would earn $440 without taking taxes into consideration.  If they request 4-hours off, their weeks wages would decrease to 36-hours, resulting in a total compensation of $396.  This is a decrease of $44.

Exempt Employees Time off Requests

Under the above-mentioned definitions, an exempt employee is exempt from the Fair Labor Standards Act’s minimum wage and overtime requirements due to the nature of their work and the duties of their job.  Rather, exempt employees are paid on a salaried basis, currently defined as a weekly salary of a minimum of $684. 

This payment is due to the employee without reduction for variations or changes in the quality or quantity of the work completed.  Essentially, this means that an exempt employee must continue to earn their weekly salary regardless of the number of hours inputted and of the work completed.

So, if an exempt employee were to take time-off, whether a partial or full day, their wages should not change.  Doing so would run afoul of the Fair Labor Standards Act and could result in violation of the act.  However, the caveat here is that these days taken off must be within the employees allotted paid-time off days or as a result of a sickness or disability.

So, if an exempt employee has taken their allotted time off and requests additional time off for personal reasons, an employer is able to deduct wages from an exempt employee.  However, if the time requested off is due to a sickness or disability, the employer may not dock any wages for the exempt individual.

Exempt vs. Non-Exempt Time Off Requests

What Does the Fair Labor Standards Act Say?

According to the FLSA regulations:

(2) Deductions from pay may be made for absences of one or more full days occasioned by sickness or disability (including work-related accidents) if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by such sickness or disability. The employer is not required to pay any portion of the employee’s salary for full-day absences for which the employee receives compensation under the plan, policy or practice. Deductions for such full-day absences also may be made before the employee has qualified under the plan, policy or practice, and after the employee has exhausted the leave allowance thereunder. Thus, for example, if an employer maintains a short-term disability insurance plan providing salary replacement for 12 weeks starting on the fourth day of absence, the employer may make deductions from pay for the three days of absence before the employee qualifies for benefits under the plan; for the twelve weeks in which the employee receives salary replacement benefits under the plan; and for absences after the employee has exhausted the 12 weeks of salary replacement benefits. Similarly, an employer may make deductions from pay for absences of one or more full days if salary replacement benefits are provided under a State disability insurance law or under a State workers’ compensation law.

Key Takeaways

  • Exempt employees are employees who do not fall under protections under the FLSA, including a minimum wage guarantee and an overtime requirement for any work completed over the 40-hour workweek.
  • Exempt employees are generally employees employed in more professional industries, including administrative, executive, sales, and computer related roles.
  • Exempt employees are generally salaried and receive minimum wages of $684 per week.
  • Exempt employees generally do not see a reduction in their base salary, regardless of time, hours, or quality of work submitted.
  • Non-exempt employees are generally employees employed in blue collar fields and industries.
  • Non-exempt employees are guaranteed a federal minimum wage and receive time-and-a-half pay for any work completed over the 40-hour workweek.
  • Non-exempt employees generally do not receive pay for time-off and days not worked.

How to Approach Time Off for Exempt Employees

In consideration of the above, it is generally advisable to allow full-time and part-time exempt employees to take time off as needed.  This is not to say that there should not be a general company policy which should be adhered to.  However, for an exempt employee, it is often simpler and easier to allow leniency with time off requests.

Not only will allowing the additional time off be easier for accounting purposes, but it will also be seen as an act of goodwill and showcase an understanding and accommodating management style.  As a good manager of an exempt, professional employee, your main focus should be on completion of the work and fulfillment of the project.  Providing leniency and flexibility with your employees will create goodwill and encourage them to put in additional work and effort in their daily output.

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