Deductions From an Exempt Employee’s Salary

The “salary test” required for overtime exemptions provides that an employee must be paid a full weekly salary for any week in which any work is performed. However, there are certain limited deductions allowed. If an employee works any part of a day, they must also be paid in full; no salary deduction is allowed. However, deductions can be made from any vacation, PTO or sick leave balance for the hours not worked, as explained in the examples below.

An exempt employee’s salary is subject to very limited deductions.

Impermissible