(a) Leave taken under FMLA may be unpaid. If an employee is
otherwise exempt from minimum wage and overtime requirements of the Fair
Labor Standards Act (FLSA) as a salaried executive, administrative, or
professional employee (under regulations issued by the Secretary), 29
CFR Part 541, providing unpaid FMLA-qualifying leave to such an employee
will not cause the employee to lose the FLSA exemption. This means that
under regulations currently in effect, where an employee meets the
specified duties test, is paid on a salary basis, and is paid a salary
of at least the amount specified in the regulations, the employer may
make deductions from the employee's salary
for any hours taken as intermittent or reduced FMLA leave within a
workweek, without affecting the exempt status of the employee. The fact
that an employer provides FMLA leave, whether paid or unpaid, and
maintains records required by this part regarding FMLA leave, will not
be relevant to the determination whether an employee is exempt within
the meaning of 29 CFR Part 541.
(b) For an employee paid in accordance with the fluctuating workweek
method of payment for overtime (see 29 CFR 778.114), the employer,
during the period in which intermittent or reduced schedule FMLA leave
is scheduled to be taken, may compensate an employee on an hourly basis
and pay only for the hours the employee works, including time and one-
half the employee's regular rate for overtime hours. The change to
payment on an hourly basis would include the entire period during which
the employee is taking intermittent leave, including weeks in which no
leave is taken. The hourly rate shall be determined by dividing the
employee's weekly salary by the employee's normal or average schedule of
hours worked during weeks in which FMLA leave is not being taken. If an
employer chooses to follow this exception from the fluctuating workweek
method of payment, the employer must do so uniformly, with respect to
all employees paid on a fluctuating workweek basis for whom FMLA leave
is taken on an intermittent or reduced leave schedule basis. If an
employer does not elect to convert the employee's compensation to hourly
pay, no deduction may be taken for FMLA leave absences. Once the need
for intermittent or reduced scheduled leave is over, the employee may be
restored to payment on a fluctuating work week basis.
(c) This special exception to the ``salary basis'' requirements of
the FLSA exemption or fluctuating workweek payment requirements applies
only to employees of covered employers who are eligible for FMLA leave,
and to leave which qualifies as (one of the four types of) FMLA leave.
Hourly or other deductions which are not in accordance with 29 CFR Part
541 or 29 CFR Sec. 778.114 may not be taken, for example, from the
salary of an employee who works for an employer with fewer than 50
employees, or where the employee has not worked long enough to be
eligible for FMLA leave without potentially affecting the employee's
eligibility for exemption. Nor may deductions which are not permitted by
29 CFR Part 541 or 29 CFR Sec. 778.114 be taken from such an employee's
salary for any leave which does not qualify as FMLA leave, for example,
deductions from an employee's pay for leave required under State law or
under an employer's policy or practice for a reason which does not
qualify as FMLA leave, e.g., leave to care for a grandparent or for a
medical condition which does not qualify as a serious health condition;
or for leave which is more generous than provided by FMLA, such as leave
in excess of 12 weeks in a year. Employers may comply with State law or
the employer's own policy/practice under these circumstances and
maintain the employee's eligibility for exemption or for the fluctuating
workweek method of pay by not taking hourly deductions from the
employee's pay, in accordance with FLSA requirements, or may take such
deductions, treating the employee as an ``hourly'' employee and pay
overtime premium pay for hours worked over 40 in a workweek.
