Old Man Winter May Get You Yet: PTO and Salary Reductions

Contributed by Beverly Alfon

The unpredictability of Chicago weather keeps all of us on our toes.  Employers need to remain ready to handle operations in the face of severe weather.  One part of that readiness plan is knowing how to handle employee absences caused by inclement weather. 

Non-exempt employees are the easiest to address.  If a non-exempt employee does not work, no wages are due to him/her – regardless of whether or not the employer’s location stays open or is closed.  The only caveat is where a state has a reporting time pay law (which requires wage payments to non-exempt employees whenever they report to work at the request of the employer, even if no work is available).   

For exempt employees, the analysis requires a little more discussion.  The starting point for the U.S. Department of Labor is that (1) the Fair Labor Standards Act does not require an employer to provide paid time off (PTO); and, (2) exempt employees must be paid their full salary for any week in which they perform any work, unless a deduction is specifically permitted under 29 C.F.R. § 541.602(b).

When an Employer Closes a Location Due to Inclement Weather

  • An employer can require an exempt employee to use PTO or paid leave bank accrual – regardless of the fact that it is the employer’s decision to close the location.  DOL Opinion Letter FLSA2005-41
  • An employer must also pay the exempt employee’s full week salary — even if the employee has no accrued leave benefits, reducing the accrued leave will result in a negative balance, or the employee already has a negative balance in the accrued leave bank (unless the location is closed due to weather for more than one full workweek).  PTO deductions are okay in this situation – but not salary deductions. 

When an Employer Keeps a Location Open Despite Inclement Weather

  • An employer can require an exempt employee who fails to report to work to take vacation or make leave deductions without jeopardizing the employee’s exempt status. 
  • Where an employer is open for business and the exempt employee chooses not to report to work for personal reasons (i.e., absence is not based on sickness or accident), then the employer can also impose salary deductions.  DOL Opinion Letter FLSA2005-46.  Similarly, if the absent exempt employee does not have any accrued PTO benefits, the employer does not have to pay the employee (i.e., the employer may place the employee on leave without pay) for the full day(s) that he or she fails to report to work under these circumstances. 
  • Salary deductions made for absences for “personal reasons” may only be made for a full day of no work.  29 C.F.R. 541.602(b)(1).  Therefore, if an employee chooses not to come into work for one day and a half, the employer may only deduct one full day’s worth of salary. 

Practice Tip:  When inclement weather appears to be headed your way, review your inclement weather and PTO policy and distribute a copy or summary of the policy to employees.