Salaried employees can be deducted for sick days only in narrow circumstances under federal law. If you’re an exempt salaried employee, your employer generally has to pay your full weekly salary for any week you do any work. The main exception: your employer can dock a full day’s pay when you’re out sick, but only if the company offers a qualifying paid sick leave or disability plan and you’ve either used up all your leave or aren’t yet eligible for it. Partial-day sick deductions from pay are almost never allowed.
When a Sick-Day Deduction Is Legal
Two conditions must both be met before your employer can reduce your salary for a sick absence. First, the employer has to maintain a bona fide plan that provides compensation for illness, such as paid sick leave or a short-term disability program. Second, you must have exhausted your available leave under that plan, or not yet be eligible to use it.1U.S. Department of Labor. Fact Sheet 17G – Salary Basis Requirement and the Part 541 Exemptions Under the FLSA
Even when both conditions are satisfied, deductions are limited to full-day absences. A deduction is also permitted when you receive salary replacement through a state disability insurance program or workers’ compensation.2eCFR. 29 CFR Part 541 Subpart G – Salary Requirements
If your employer has no qualifying sick leave plan at all, no deduction for illness is permitted. That surprises many workers at smaller companies where leave is informal or handled case by case.
Why the Salary Basis Rule Matters
To be exempt from overtime under the Fair Labor Standards Act, an employee must earn at least $684 per week ($35,568 annually), perform executive, administrative, or professional duties, and be paid on a “salary basis.”3U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemption Being paid on a salary basis means receiving a fixed, predetermined amount each pay period that doesn’t shrink based on how much or how well you work. The regulation is blunt: an exempt employee must receive the full salary for any week in which they perform any work, regardless of days or hours actually put in.4eCFR. 29 CFR 541.602 – Salary Basis
That’s the rule sick-day deductions bump up against. Any deduction has to fit inside a specific exception, or it’s improper.
Partial-Day Sick Absences
This is where employers most often get it wrong. Your employer cannot reduce your salary for a partial-day absence caused by illness, even if you’ve burned through every hour of paid sick leave. If you work any part of the day, you’re entitled to your full day’s pay.4eCFR. 29 CFR 541.602 – Salary Basis
The same protection covers personal absences. Miss a day and a half for personal reasons and your employer can deduct only the full day. The half-day counts as a day worked, and the pay for it stays intact.5U.S. Department of Labor. FLSA Overtime Security Advisor – Compensation Requirements – Deductions
One narrow exception exists. When an exempt employee takes unpaid leave under the Family and Medical Leave Act, the employer may deduct proportionately for hours not worked, including partial-day increments. If you normally work 40 hours a week and use four hours of unpaid FMLA leave, that week’s salary can be reduced by 10 percent.4eCFR. 29 CFR 541.602 – Salary Basis
Your PTO Balance and Your Paycheck Are Two Different Things
Here’s a distinction that confuses almost everyone. Subtracting hours from your PTO or sick-leave bank is not the same as reducing your salary. Your employer can deduct hours from your leave balance for any absence, including a two-hour partial-day sick absence, as long as your actual paycheck for that pay period stays whole.6U.S. Department of Labor. FLSA Opinion Letter – Paid Time Off
Leave early because you’re sick, and your PTO bank can drop by two hours. Your paycheck should not. Even when the balance hits zero or goes negative, you must still receive your full salary for any partial day worked. The employer absorbs the cost. The partial-day rule protects your pay, not your leave accounting.
If You’re Salaried But Non-Exempt
Not every salaried worker is exempt. Some receive a fixed salary but don’t meet the duties test or the salary threshold, which makes them non-exempt. The salary basis protections above don’t apply to non-exempt salaried employees, and employers have more room to deduct pay for time not worked, including partial-day sick absences.
Non-exempt salaried workers are still entitled to overtime for hours worked beyond 40 in a workweek, calculated by dividing weekly salary by total hours worked to find the regular rate.7U.S. Department of Labor. Fact Sheet 23 – Overtime Pay Requirements of the FLSA If you’re unsure which category you fall into, ask your HR department for your classification. The answer changes what your employer can legally do with your sick-day pay.
What to Do About an Improper Deduction
An improper deduction from an exempt employee’s pay isn’t just a paperwork error. If a company maintains an actual practice of docking exempt employees improperly, the employees lose their exempt status for the whole period the deductions occurred. Every worker in the same job classification, working under the same managers responsible for the deductions, becomes entitled to overtime pay they were previously denied.5U.S. Department of Labor. FLSA Overtime Security Advisor – Compensation Requirements – Deductions
An isolated or inadvertent mistake won’t automatically break the exemption, provided the employer reimburses the employee promptly. Whether something crosses from “isolated” into “actual practice” depends on how many deductions happened, over what period, and whether the employer corrected the problem once it came to light.
Many employers rely on a safe harbor to preserve the exemption when errors occur. To qualify, the employer must have a clearly communicated policy prohibiting improper deductions, provide a complaint mechanism, reimburse employees for any improper deductions, and act in good faith going forward.8eCFR. 29 CFR 541.603 – Effect of Improper Deductions From Salary The protection disappears if the employer keeps making improper deductions after employees complain or refuses to pay them back.
If you think your pay has been docked improperly, start by raising it with HR or your supervisor. Many employers correct the error once it’s flagged, especially those with a safe harbor policy in place. If the company won’t fix it, you can file a confidential complaint with the U.S. Department of Labor’s Wage and Hour Division by calling 1-866-487-9243 or filing online.9U.S. Department of Labor. How to File a Complaint The WHD can investigate and recover back wages on your behalf.
State Sick Leave Laws Can Give You More
Federal rules are the floor. More than 20 states and the District of Columbia have enacted mandatory paid sick leave laws, typically requiring between 40 and 72 hours of paid sick leave per year depending on the state and the employer’s size. Where a state law applies, your employer must follow whichever rule is more protective. That might mean more accrued hours, a broader definition of qualifying illness, or coverage for workers federal rules leave out. Check your state labor agency’s website, because the variation between states is significant.