(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, professional, or computer 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. See 29 CFR 541.602(b)(7). 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 FMLA leave. Hourly or other deductions
which are not in accordance with 29 CFR part 541 or 29 CFR 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 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 serious injury or illness; or for leave
which is more generous than provided by FMLA. 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.
[73 FR 68089, Nov. 17, 2008]
