Q&A: Minimum time requirements for PTO

Question

What is the smallest increment of time that an employer can require exempt employees to take when using their PTO? I know that half-day (4-hour deductions) for exempt employees is usually okay, but could an employer require a 2-hour timeframe as well? For example, if an exempt employee who typically works 8-5 comes in at 10, could they deduct 2 hours from their PTO balance or are they required to deduct 4 hours?

Answer

It is important to distinguish between deducting from an exempt employee’s paycheck and deducting from an employee’s allotted sick time.

Under the FLSA regulations, employers may not dock the pay of exempt employees for absences of less than a day, except as allowed under the Family and Medical Leave Act. Further, only certain deductions may be made for full day absences, such as for absences for full days for personal reasons or for illness when the employer has a bona fide sick leave plan and for certain disciplinary infractions. See 29 C.F.R. §541.602(b).

Employers may not deduct from an employee’s pay for less than a day’s absence for sickness or disability. But, if an employer, for example, provides an employee with 2 weeks of paid sick time by company policy and the employee has used up all of his or her sick time, an employer may deduct from the employee’s paycheck in full-day increments if the employee is out for a day or more. If the employee works for any part of a day, though, and is out sick the remainder of the day, the employer may not deduct from the employee’s paycheck.

On the other hand, employers may deduct from an employee’s allotted sick time under the company’s leave plan in increments of less than a day if the employee has not used up his or her paid sick time. There is no restriction on deductions from an exempt employee’s accumulated leave or PTO account because any missed work is being offset by her PTO and her actual weekly salary therefore is not affected. Accordingly, requiring exempt employees to take time off in two-hour (or even one hour) increments should not run afoul of federal wage and hour law.

You will also want to make sure that there are no issues under state law.

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