Last Friday, the Fourth Circuit issued an unpublished per curiam decision in Kulish v. Rite Aid Corporation and Eckerd Corporation [here], which affirmed a decision by the District of Maryland [here] that took a practical approach to the “salary basis” requirement for white-collar exempt employees. The FLSA’s salary basis regulations require most exempt employees to receive the same guaranteed salary every week regardless of the number of hours they work. The policy at issue in the Kulish case took advantage of an exception to that general rule, which allows employers to reduce their employees’ pay if they take a full-day absence for personal reasons.
The District Court’s decision in the Kulish case upheld Rite Aid’s unpaid leave policy, which permitted pharmacists to take unpaid personal days under some circumstances, but required them to do so only in full-day increments. The pharmacists claimed that the policy resulted in reduction of their pay for absences “occasioned by the employer” – thus causing a salary basis violation – by requiring them to a full day off when they desired only a partial day away from work. The District Court, however, approved the policy, finding that it did not force employee absences for reasons within the employer’s control. Instead, it ensured that employees were paid for all time worked and allowed them to make their own choices when faced with scheduling issues. Pharmacists could switch shifts with other pharmacists for personal absences of a partial day or simply take a full day in lieu of a partial day. Late arrivals, breaks, store closures for inclement weather, and other emergencies did not affect the pharmacists’ salaries.
The decision appeared to recognize the dilemma many employers face when responding to exempt employees’ requests for partial day personal absences: whether to allow the time off, and if so, how to ensure salary basis compliance. Clearly, employers want to avoid hour-for-hour approaches with exempt employees. Rite Aid’s full-day leave requirement attempted to strike a reasonable balance, and the District Court so found and the Fourth Circuit affirmed. The decision provides helpful guidance regarding polices covering exempt employee personal absences.