The question of docking an exempt employee has been raised on hotline calls over the past month.  As a general rule, an exempt employee cannot be docked unless it is for five consecutive business days, but there are exceptions to this general rule.

Fact Sheet #17G: Salary Basis Requirement and Part 541 Exemptions Under the Fair Labor Standards Act (FLSA) explain when an exempt employee can be docked.  Per the Fact Sheet:Deductions from pay are permissible when an exempt employee:

• is absent from work for one or more full days for personal reasons other than sickness or disability;
• for absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy, or practice of providing compensation for salary lost due to illness;
• to offset amounts employees receive as jury or witness fees, or for military pay; for penalties imposed in good faith for infractions of safety rules of major significance;
• or for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions.

Also, an employer is not required to pay the full salary in the initial or terminal week of employment, or for time in which an exempt employee takes unpaid leave under the Family and Medical Leave Act.  However, if an exempt employee is absent from work for less than an entire workweek—meaning they work part of a week—because of jury duty, serving as a witness, or military leave, the employer must still pay the employee their full salary for that week.

Where confusion comes in at times is when an employee works part of day and then takes the rest of day off for sick time and has no PTO remaining.  In this situation, the employee has to be paid for the full day.  It is important that employers do have a sick leave policy in place and employees have notice of it.  Further, in the FMLA policy, it should also be noted that once paid leave runs out, the remaining part of the leave will be unpaid.  A best practice for an employee who has no paid leave balance applicable and available for use is to advance paid leave (creating a negative leave balance) to account for the unworked portion of the day.

How does that apply when dealing with intermittent FMLA?  This is the only exception to partial day absence deductions. For example, if an exempt employee is two hours late, the employer may not dock the employee’s pay. If the employee is two hours late due to intermittent FMLA, the employer may dock the employee’s pay for those two hours.

In this situation there are a couple of options per Drew L. Alexis, Of Counsel with Los Angeles-based Kinaga Law Firm: 

• Convert the exempt employees to hourly employees during the period that the intermittent FMLA leave is being sought. You will still be meeting your FLSA obligations this way.
• Keep the exempt employees as salaried and make appropriate adjustments to the salary on the basis of the employee’s regular workweek and hourly rate. You do this by applying their hourly rate to the missed hours in the workweek.

So which option is best in this administrative nightmare?  Likely the second option, but there is a problem.  Exempt employees in their offer letter are presented an annual, monthly, or weekly salary, not an hourly rate.  So the hourly rate has to be determined through the paystub.  Therefore, to prevent this situation, include it as well in the offer letter in the future.   

Mistakes can happen.  There is a safe harbor if a mistake occurred.   Per the Fact Sheet:

If an employer (1) has a clearly communicated policy prohibiting improper deductions and including a complaint mechanism, (2) reimburses employees for any improper deductions, and (3) makes a good faith commitment to comply in the future, the employer will not lose the exemption for any employees unless the employer willfully violates the policy by continuing the improper deductions after receiving employee complaints.

Therefore, always document actions with explanations if necessary.  Mistakes happen and if unsure, contact your legal counsel for more guidance. 

Source:  Fact Sheet #17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA), Wilentz 7/9/2025, Lehr Middlebrooks 4/30/25, HR Daily Advisor 5/18/15