I have recently had two employees need/take excessive time off due to illness or personal matters. They are both "salaried" employees, meaning they are not punching a clock and both are expected to be here, if neccessary, beyond 8 hours a day. It is rare that that is asked/required of either. I have, up until recently, never considered NOT paying them when they were out for personal reasons, but one was recently out for 3 weeks due to a surgery and when I suggested I may not be able to continue paying for "time off", he suggested he was "salaried" and I had to pay him...regardless of how much time he was out of work. Mine is a small business. I cannot afford to continue paying "salaried" employees for extended time off. I am considering adding an adendum to our employee's manual (which refers to all as "full-time" and the two classifications below that are "hourly", which means time and a half for overtime, or salaried, which means working some extra but not being docked for "reasonable" time off needed), which would limit what my business would pay for personal time off if one is salaried. Can I get into trouble for this? Currently, salaried employees, after one year, receive 2 weeks pd vacation and all paid holidays.
Thanks...

First, how many in your business.

You do NOT have to pay an employee that is out on extended medical leave unless you have already established a precedent for doing so.

FMLA, if applicable, only requires that you hold their job for 12 weeks. It doesn't require that you pay them while they are out.

You may choose to let them use PTO if you wish... but it is not law that says you must.

Consider having five days sick leave per year added to your benefits for salaried, exempt employees.

They use the five days, subsequent absences for illnesses are docked.

Eliminate salaried, non-exempt employees. There are too many headaches, such as overtime, if worked, and the inability to dock pay even if the PTO bank has been exhausted.

Don't use the concept of "full-time" or "part-time." Instead, write your benefits plans to describe who is eligible for those benefits and under what conditions.

First of all, salaried is only a pay method and means nothing by itself. What matters is exempt or non-exempt, which have legal definitions under Federal law and in some cases state law as well. It is the employee's job duties (not their job title or how they are paid) that determines if an employee is exempt or non-exempt. All employees are considered to be non-exempt until proven otherwise. It is legal to pay an employee who qualifies to be exempt as non-exempt; it is not legal to pay an employee who does not qualify to be exempt as anything but non-exempt. Either can be paid on salary, if and only if the non-exempt employee also receives overtime when due.

An employee who is non-exempt has no legal expectation of being paid for any time they did not work, with extremely limited exceptions that do not apply here. A non-exempt employee must be paid overtime if they work over 40 hours in a week (in some states over 8, or 12, hours in a day, but that does not apply to you in NC).

An exempt employee has no legal expectation of being paid anything whatsoever beyond their regular salary, ever.

However, since an exempt employee is not paid by the hour, their salary can only be docked in very limited circumstances. Those circumstances are as follows:

1.) It is the first or last week of employment and the exempt employee does not work the entire week
2.) The exempt employee is on FMLA
3.) The employer offers a reasonable number of paid sick days, and the exempt employee calls in sick when they either have used all the days available to them or are not yet eligible for any
4.) The exempt employee takes a full day off for personal reasons
5.) The exempt employee was suspended for a major safety violation
6.) The exempt employee was suspended for the violation of a written company policy that applies to all employees and which relates to workplace conduct (drugs/alcohol in the workplace; sexual harassment; workplace violence, etc.)

In the case of #s 1 and 2, the exempt employee can be docked in partial day increments as long as they are paid for all the time actually worked. In the case of #s 3-6, the exempt employee can only be docked in full day increments, meaning that if they work even five minutes of the day, they have to be paid for the whole day. However, in all states except California and even sometimes there, the employer may legally require the use of vacation or other paid leave for the part of the day that the employee did not work.

By "salaried", if you mean exempt, here is the FLSA regulation regarding the circumstances under which you may dock an exempt employee's weekly salary.
http://www.dol.gov/dol/allcfr/ESA/Title_29/Part_541/29CFR541.602.htm

I would also point out that, generally speaking, you are not required to pay an employee who did not work for the entire week.

Do you have a sick pay plan to replace wages?

I have, at any given time, between 15-20 employees. I am quickly learning I must understand "exempt and non-exempt" employee status. Wow. It is overwhelming what I don't seem to know. We are just small enough that we don't have an HR person here.

Only in the past few years have I even been able to afford to offer sick days. Currently we offer 2 days a year. I know, not much, but I also offer a week's pd. vacation to hourly employees, and two weeks to "salaried" or "management" type employees(after the first year), plus paid life insurance, matching 401K, and will pay half of major medical, which most turn down. Vacation time also increases w/ the number of years worked. Most of my competitors can't touch this. I guess it's why it is upsetting when an employee thinks because they are on salary, if they need 3 months off, I'm supposed to pay them.

Where can I go for clarification and "layman" explanations on exempt and non-exempt?

And who the heck are you guys that are so readily available with these great responses? I'm giddy...so happy to have someone answer these questions.

Most of the people that post here have been where you are.

We are employees, employers and, even, a couple of lawyers that have lost their minds and give advice for free.

Don't feel alone and overwhelmed. Okay, feel overwhelmed. But don't feel alone. Most of us found this stuff out by making some pretty spectacular mistakes.

I am sure someone has the exempt/nonexempt classifications in their back pocket and will post in a minute.

Heck...

Start here http://www.dol.gov/elaws/esa/flsa/screen75.asp

This website, by the way, will become your dearest friend.

Okay, I'll check out that website. Thanks so much. In case you can't tell, I'm a woman business owner w/ a degree in education and own a plastic recycling proccessing facility. I'm in over my head on much of the HR stuff, been paying for an employee to take classes at local college, but it hasn't helped any in this area yet. Mucho thanks for the help and support. Have a great weekend!

PS...are the folks responding typically in NC or from all over? I know the laws are different in different states.

Okay, I'll check out that website. Thanks so much. In case you can't tell, I'm a woman business owner w/ a degree in education and own a plastic recycling proccessing facility. I'm in over my head on much of the HR stuff, been paying for an employee to take classes at local college, but it hasn't helped any in this area yet. Mucho thanks for the help and support. Have a great weekend!

PS...are the folks responding typically in NC or from all over? I know the laws are different in different states.

We are all over, but we (see how easily I just speak for everyone on this site?) do try to research the state specific laws when applicable.

If someone is actually an expert in a state law (Like, say, DAW with California), we will let him/her take the lead.

Responders are from all over. Start with federal law. That applies everywhere. The website you were given was for federal DOL. State law can be more favorable to the employee then state law but cannot be less favorable.

I cannot speak specifically to NC but in general southern states tend to be pretty much like federal law with comparitively few state labor laws. States like CA and MA tend to have much more in the way of state labor law. But it is complicated. States tend to get very unique in their approach to laws. TX for example is a rather unusual mix of minimal state law combined with some really populist rules such as their garnishment rules. It is very hard to generalize.

Responders are from all over. Start with federal law. That applies everywhere. The website you were given was for federal DOL. State law can be more favorable to the employee then state law but cannot be less favorable.

I cannot speak specifically to NC but in general southern states tend to be pretty much like federal law with comparitively few state labor laws. States like CA and MA tend to have much more in the way of state labor law. But it is complicated. States tend to get very unique in their approach to laws. TX for example is a rather unusual mix of minimal state law combined with some really populist rules such as their garnishment rules. It is very hard to generalize.

Told you DAW was smart.

And who the heck are you guys that are so readily available with these great responses? I'm giddy...so happy to have someone answer these questions.

Not everyone finds the responders here to meet their demands.

Two days sick leave won't cut it for an exempt employee. Add to the sick days (five or more), drop some vacation and/or holiday time.

I am not surprised about most employees turning down the major medical, even though you offer to pay half of it. The problem is...nahh, I will stay off the soap box.

And, just so you know, ScottB is a business owner himself. He gives good practical advice. ;)

I am one of those lawyers who has lost his mind and gives out free advice, but I don't know the answer to this question. Plastics, I suggest you go see an "employment benefits" lawyer in one of the bigger firms in your area and get a short course on this stuff. Paying for a legal consultation now will probably save you some big bucks in the future. Case in point--if you decide to use a lie detector test in the workplace, bone up on the federal Employee Polygraph Protection Act first. I had a client who did not know about it and relied on the independent contractor polygraph operator to do it right, and as a result, it cost my client a truckload of money to resolve all the claims that arose from the allegedly aggrieved employee.

Finding an expert attorney to advise on the front end before you take any action will undoubtedly be much cheaper than the cost you will pay if you screw up due to lack of knowledge. Don't guess at this stuff.

Bob

I am one of those lawyers who has lost his mind and gives out free advice, but I don't know the answer to this question. Plastics, I suggest you go see an "employment benefits" lawyer in one of the bigger firms in your area and get a short course on this stuff. Paying for a legal consultation now will probably save you some big bucks in the future. Case in point--if you decide to use a lie detector test in the workplace, bone up on the federal Employee Polygraph Protection Act first. I had a client who did not know about it and relied on the independent contractor polygraph operator to do it right, and as a result, it cost my client a truckload of money to resolve all the claims that arose from the allegedly aggrieved employee.

Finding an expert attorney to advise on the front end before you take any action will undoubtedly be much cheaper than the cost you will pay if you screw up due to lack of knowledge. Don't guess at this stuff.

Bob

of course, I meant "lawyers that have lost their mind" in the nicest possible way :D