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In addition to the requirement that the employee’s duties be of an exempt nature, both State and Federal law require that the employee be paid on a salary basis in order for the employee to be exempt. This is because the exempt employee is not paid based on the hourly value of the work, but the overall value of his/her contribution. The exempt employee may work more or less than forty hours per week. Just as the exempt employee will not be paid overtime for working more than 40 hours in a week, the exempt employee should not lose pay for working less. The exempt employee’s pay may not be subjected to reduction because of variations in the quantity or quality of the work performed.

As a general rule under federal law, exempt employees must receive their full salary for any week in which they perform any work, regardless of the number of days or hours actually worked. Thus, deductions ordinarily cannot be made, for example, for absences during a portion of a workweek resulting from jury duty, attendance as a witness, most disciplinary suspensions, or temporary military leave. Employees who are subject to employer policies that permit the docking of pay for missing less than a full week’s work may be considered for that reason alone not to be compensated on a salary basis, even if the policy has never actually been applied to them. The only exception is for intermittent or reduced leave under the Family and Medical Leave Act, which allows deductions even for partial-day absences. Under the new state-law guidelines, the exempt employee must receive full pay for any month in which s/he performs any work, even if only a single hour. Moreover, no deductions may be made for any disciplinary suspensions of less than full calendar month increments.

There are a few exceptions providing for daily absence considerations under both state and federal law. Deductions may not be made from a salaried employee’s predetermined compensation for absences occasioned by the employer or the business’s operating requirements if the employee is ready, willing and able to work. However, deductions are permissible for absences from work of a full day or more for personal reasons (i.e., other than for sickness or accident). The primary example of this is when an exempt employee takes a full day off for vacation.

Deductions may also be made without invalidating an employee’s salaried status when the employee is absent for a day or more because of sickness or disability if the deduction is made in accordance with a bona fide plan, policy, or practice of providing compensation for loss of salary occasioned by both sickness and disability. Thus, deductions for absences of full-day increments because of sickness or disability may be made before an employee has qualified under the employer’s plan, policy or practice, and after he has exhausted his leave allowance under such a program.

Courts have reached differing conclusions on whether an employer may permissibly require or permit salaried employees to use accrued leave benefits for fractions of a day missed because of personal reasons or illness.