Holiday Pay. Exempt. Probation Period.
We hired a new employee on 06/30/09. She was hired as a salary, exempt employee. Our Employee Handbook says employees are not eligible for holiday pay until they have passed their 90 day probation. We closed on 07/03/09 for the 4th of July holiday. She was paid for 32 hrs. If she had passed her probation, she would have been paid for 40. On 07/08/09, she suddenly resigned. She is now demanding holiday pay for the day we closed even though she had not completed her 90 day probation. We have never paid holiday pay in the past to anyone who hadn't ccompleted 90 days. Do we need to pay this because she was Salaried Exempt? I have gotten conflisting opinions from attorneys Does anyone know the answer to this beyond a doubt? Is this a gray area?
Thank you for your question. Under federal law, regardless of company policy on holidays and probation periods, an exempt employee cannot be docked pay if they were ready, willing, and able to work, but work was not available (ie; you closed for a holiday).The only gray area I can think of would be whether the employee was correctly classified as exempt. If the employee was correctly classified then you must pay her full salary for the week.While I cannot provide legal advice, there can be stiff penalities that accumulate each day when you fail to pay all amounts due to an employee within three days of their Termination. I would strongly urge you to make sure that you are meeting all of your obligations to the ex-employee before any additional days elapse.Also note that if you do dock "exempt" employees in this way you may be creating classification issues, as the statute says,"An employee is not paid on a salary basis if deductions from the employee's predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business."Closing for a holiday at your discretion would be an absence "occasioned by the employer". I've provided the federal code below with the pertinent section in bold:
29CFR541.602 - Salary basis.
18 years experience handling a wide variety of legal issues as a business executive.
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