Scenario: An exempt employee wants to take a day off but has no PTO left. Can you deduct pay for that day or do you have to pay them anyway?

FLSA Rules Say: It Depends.

· Under the Fair Labor Standards Act (FLSA), exempt employees generally must be paid their full salary for any week in which they perform any work, regardless of the number of days or hours worked.

But here’s the nuance:

· If the absence is a full day and it’s for personal reasons (not illness or disability), and if the employee has no accrued leave available, you can legally dock their pay for that full-day absence.

This is a permissible deduction under FLSA regulation. Caveats:

The absence must be voluntary and for personal reasons. Example: It cannot be a company-mandated shutdown.
The deduction must be for a full day. Partial-day deductions are NOT allowed for exempt staff, even if Paid Time Off (PTO) is exhausted. (There are narrow exceptions for things like Family Medical Leave Act or FMLA.)

Best Practices:

Ensure your employee handbook or PTO policy spells this out. It helps avoid perception issues and ensures consistency.
Consider the cultural and equity implications: Does docking pay align with your total rewards philosophy?
Be mindful of U.S. state-specific laws, especially in states like CA, NY, MA, which often layer on additional protections. When in doubt, consult legal counsel.

How does your employer handle this? Do you allow unpaid full-day absences when PTO is exhausted, or do you take a different approach?

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