Is it legal for an employer when calculating overtime for a salaried nonexempt employee... to deduct time that you are under an eight hour day from the time you are over an eight hour day? and what is this called?

Huh? Please give an example. I'm not sure what you're talking about. :confused:

If I understand correctly, you are talking about a situation where you work, for example, 7 hours on Monday, and then 9 hours on Tuesday. In that case you would get paid 15 hours of regular pay, and one hour of overtime.

what happens if you are salaried?

I am not too familar with salaried non-exempt (well people that are classified that way on purpose, I have lots of experience with salaried perople who are misclassified as exempt). I would assume the company would have some sort of policy allowing docking for the 7 hour day, since it would have to pay overtime for the 9 hour day.