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Deductions from salaried pay New Jersey

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  • Deductions from salaried pay New Jersey

    I need some clarification regarding allowable deductions from salaried employees. According to 29CFR541.602, we cannot deduct for sickness or disability unless 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."
    If I'm understanding this correctly, we can't deduct missed time from a salaried employee, unless we offer some form of compensation for the lost time, i.e. Sick Time, etc. But, our company only allows 2 sick days per year.
    Does this qualify as a "bona fide plan" under labor laws? Meaning that a salaried individual who misses more than 2 days in a year can have those sick days deducted from their salary?
    I've seen posts where it's recommended that sick time benefits cover at least 5 days, but I can't find that anywhere in labor law.
    Your help is greatly appreciated.

  • #2
    The opinion seems to be that you must offer five days to be a bona fide plan. I could not possibly point you to any DOL opinions or case law on that.
    Senior Professional in Human Resources and Certified Staffing Professional with over 30 years experience. Any advice provided is based upon experience and education, but does not constitute legal advice.

    Comment


    • #3
      http://www.dol.gov/esa/whd/opinion/F...14_32_FLSA.htm

      ... Given the fact-specific nature of the inquiry, there is no bright-line test articulating how many days and how short a waiting period are required for a plan to be bona fide. The Wage and Hour Division, however, previously has approved leave plans that allow for at least 5 days of sick leave per year as bona fide under the regulations.
      "Reality is that which, when you stop believing in it, doesn't go away".
      Philip K. **** (1928-1982)

      Comment


      • #4
        Salaried is not necessarily a synonym for exempt.

        The law being discussed applies to EXEMPT employees. Not all salaried employees are necessarily exempt.
        The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

        Comment


        • #5
          The law doesn't stipulate exactly what qualifies as a bona fide plan, but the opinion letter referenced above does help clarify this quite a bit.
          While they have qualified plans offering 5 or more sick days, there is nothing that disqualifies a plan with only 2 sick days, as long as it clearly defined and communicated, and is administered impartially.
          Based on this opinion, we would not be in violation if we deducted from an employees salary, any sick time missed beyond the 2 sick days and 10 vacation days.

          Thank you all for your quick response.

          Comment


          • #6
            Just to be clear, while I understand the hair that you trying to split, there is also nothing in the opinion letter which indicates that DOL would consider your plan to be qualified. DOL is saying that they have never qualified a plan with fewer then 5 days. There is nothing in that opinion letter which says or implies that a 2 day plan which otherwise follows the rules would be necssarily be approved. Your decision if you want to take chances, but do not kid yourself that you are stretching things here.

            Your employees if they posted a question on this or any other website would be strongly urged to file a wage claim against your company. It might not work, but IMO their chances are probably better then yours. If you do searches on this website you will find out that this is exactly the advise employees on the opposite of this issue receive.

            Alternatively, just change your 2 sick and 10 vacation days to 12 PTO days, and your potential problem goes away.
            "Reality is that which, when you stop believing in it, doesn't go away".
            Philip K. **** (1928-1982)

            Comment


            • #7
              That's a great suggestion DAW. My only concern w/changing everything to PTO is that employees will abuse the system by calling in sick 10 or 12 times throughout the year, but that concern is secondary to being sure I'm in compliance with the law.

              In the end we will either convert the vacation/sick days to 12 days of PTO,
              or change our policy to allow for 5 sick days. We will try the first option and depending upon the results, will only impliment the second if we find an abuse of the new policy.

              Thanks

              Comment


              • #8
                That has not been my experience. I have converted two companies from vacation/sick/personal to PTO, and both times sick leave usage went DOWN.

                It won't take them long to figure out that the more days they call in sick, the fewer days they have to visit DisneyWorld.
                The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

                Comment


                • #9
                  While I agree that changing to PTO is prefered, there is another possibility. Send your proposed 2 day plan into DOL and formally request that they approve it (or not). That is where all of these opinion letters we cite come from. Employers excercising due diligence and finding out if the "Kool-Aid" was poisoned before they drank it. Of course, even if federal DOL approve this (or other plans), state DOL could still disapprove of it, so that is one more place where an opinion letter could be sought. Which is why most employers tend to just go the PTO route. It is simpler, easier to keep legal and as CBG says, for most employers sick time taken tends to go down, not up. Also, when an employer loses in court because of a flawed comp policy, in my experience senior management tend to blame everyone but themselves for the bad policy. The whole point of being senior management is that the "buck" always stops with someone else.
                  "Reality is that which, when you stop believing in it, doesn't go away".
                  Philip K. **** (1928-1982)

                  Comment

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