FLSA2006-15 — Salaried non-exempt employees’ sick leave and fluctuating workweek overtime

U.S. Department of Labor
Employment Standards Administration
Wage and Hour Division
Washington, D.C. 20210

May 12, 2006 FLSA2006-15

Dear Name*:

This is in response to your letter inquiring whether your client’s fluctuating workweek method of payment
complies with the requirements of the Fair Labor Standards Act (FLSA) and 29 C.F.R. § 778.114 (copy
enclosed).

Your client utilizes the fluctuating workweek method to compensate its salaried non-exempt employees. The
employer has an established sick leave plan that allows employees to accrue sick leave absences.
An
employee may accrue 4 hours of paid sick leave per month after the first 30 days of employment. The
employer debits hours from the employee’s bank of paid sick leave when the employee is absent under the
sick leave policy for any duration. Your client would like to know whether it may take full day deductions
from the salary of an employee paid on the fluctuating workweek method after the employee has exhausted
the employee’s sick leave bank, or before he or she has earned enough sick leave to cover the absence.

According to 29 C.F.R. § 778.114(a), a salary paid based on the fluctuating workweek method is intended to
compensate an employee “for whatever hours he is called upon to work in a workweek, whether few or
many.” In addition, subsection (c) requires that “the employer pays the salary even though the workweek is
one in which a full schedule of hours is not worked.” You argue that the “salary basis” requirements of 29
C.F.R. Part 541, the regulations implementing the overtime and minimum wage exemption for certain
executive, administrative, and professional employees, should apply to the definition of salary in 29 C.F.R.
§ 778.114. Your argument is erroneous in that the salary basis requirement and the deductions from salary
that are allowed as set forth in section 541.602 (copy enclosed) apply solely to the FLSA section 13(a)(1)
overtime and minimum wage exemption. See Wage and Hour Opinion Letter August 20, 1991 (copy
enclosed.)

The fluctuating workweek regulation does not authorize similar deductions. In contrast, the regulation
requires the employer to pay the fixed salary “for the hours worked each workweek, whatever their number.”
29 C.F.R. § 778.114(a). Thus, the fixed salary is the employee’s straight time compensation, both “for long
workweeks as well as short ones.” 29 C.F.R. § 778.114(c). Therefore, it is the longstanding position of the
Wage and Hour Division that an employer utilizing the fluctuating workweek method of payment may not
make deductions from an employee’s salary for absences occasioned by the employee. See Wage and Hour
Opinion Letters August 20, 1991, November 30, 1983, December 29, 1978, and March 1, 1967 (copies
enclosed). However, an employer may take a disciplinary deduction from an employee’s salary for willful
absences or tardiness or for infractions of major work rules, provided that the deductions do not cut into the
required minimum wage or overtime compensation. See Field Operations Handbook § 32b04b(b) (copy
enclosed); see also Sampson v. Apollo Resources, Inc, 242 F.3d 629, 639 (5th Cir. 2001). If the deductions
are made frequently or consistently, then the practice of making such deductions would raise questions as to
the validity of the compensation plan. 29 C.F.R. § 778.306(b) (copy enclosed). Therefore, it is our opinion
that your client may not make full day deductions from the salary of its fluctuating workweek employees
when the employee has exhausted his or her sick leave bank or has not yet earned enough leave to cover the
absence.

This opinion is based exclusively on the facts and circumstances described in your request and is given based
on your representation, express or implied, that you have provided a full and fair description of all the facts
and circumstances that would be pertinent to our consideration of the question presented. Existence of any
other factual or historical background not contained in your letter might require a conclusion different from
the one expressed herein. You have represented that this opinion is not sought by a party to pending private
litigation concerning the issue addressed herein. You have also represented that this opinion is not sought in
connection with an investigation or litigation between a client or firm and the Wage and Hour Division or the
Department of Labor.

We trust that the above is responsive to your inquiry.
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U.S. Department of Labor
Employment Standards Administration
Wage and Hour Division
Washington, D.C. 20210

Sincerely,

Alfred B. Robinson, Jr.
Acting Administrator

Enclosures:
29 C.F.R. § 778.114
29 C.F.R. § 541.602
29 C.F.R. § 778.306
Wage and Hour Opinion Letters 8/20/1991, 3/1/1967, 12/29/1978, and 11/30/1983
Field Operations Handbook § 32b04b(b)

Note: * The actual name(s) was removed to preserve privacy in accordance with 5 U.S.C. § 552(b)(7)

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