June 16, 2023, 4:00 AM Linda Bond Edwards RumbergerKirk
Photographer: Tim Boyle/Bloomberg via Getty Images
RumbergerKirk’s Linda Bond Edwards shares why employers must make documentation and communication about wages a key part of their hiring and retention practices.
Accrued time can’t be carried over from year to year.
Advance notice and approval must be obtained before taking leave.
Leave can only be taken in blocks of four hours or more.
Substituting paid leave for salary is no different. Employers may face receiving pushback from employees if the employer has failed to fully communicate the policy or practice of using paid leave at times when the employee didn’t choose to use accrued time. Employees can become protective of “their” paid leave when the employer’s policy reduces the amount of time available to the employee. Because the FLSA prohibits employers from making deductions from an exempt employee’s salary, employees may argue that the employer’s unilateral use of paid leave to adjust salary amounts to a deduction from salary, but the Third Circuit soundly rejected that argument. The court was clear that paid leave is a benefit and that the FLSA deduction regulations doesn’t address reductions or changes in benefits. Attorneys advising employers on paid leave to ensure compliance with the salary provisions of the FLSA should remember the following:
The FLSA doesn’t prohibit employers from using paid leave to ensure that an employee receives a salary each week. Paid leave is a benefit and is different from an employee’s salary.
Employers may not make deductions from an exempt employee’s salary except for specified reasons. If an employer decides to make deductions from an employee’s leave balance, the process should be communicated and explained to employees.
Effect on Paid Benefits At first glance, it may seem these rulings could affect how employers pay benefits to employees, but most benefits are provided as a matter of policy, not law. Employers have significant leeway in how some benefits are administered. In a tight labor market, employers compete for employees, and benefits can be the deciding factor in attracting and keeping talent. If the process is well-documented and communicated, the employee will know their paid leave balances and other benefits so that they can avert potential problems. This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners. Author Information Linda Bond Edwards is of Counsel with RumbergerKirk and represents employers in the private and public sectors in matters involving employment and labor issues. Write for Us: Author Guidelines