Exempt employees are awarded vacation time at the beginning of each calendar year.  Is it legal to deduct vacation for absences of less than 8 hours?  We currently allow non-exempt employees to use vacation in 4 hour increments.

In most cases yes--GIVEN that your handbook, policy guideline, etc. outlines that the company reserves the right to deduct for half day vacations on all employees.  Exempt employees have, especially where I have worked, abused the privilege of coming in/leaving early and still receiving full day's pay.  Therefore, we outlined within our P&P that if you are to take a half day (exempt or non-exempt), it must be approved and will subsequently be deducted as 4 hours PTO. 

 Keep in mind however that if nothing is stated and you have no documented practice standard regarding exempt time, you are better safe than sorry and pay them the entire day w/o deduction.

SubGrapHR:

In most cases yes--GIVEN that your handbook, policy guideline, etc. outlines that the company reserves the right to deduct for half day vacations on all employees.  Exempt employees have, especially where I have worked, abused the privilege of coming in/leaving early and still receiving full day's pay.  Therefore, we outlined within our P&P that if you are to take a half day (exempt or non-exempt), it must be approved and will subsequently be deducted as 4 hours PTO. 

 Keep in mind however that if nothing is stated and you have no documented practice standard regarding exempt time, you are better safe than sorry and pay them the entire day w/o deduction.

There is a battle over this at the moment.  Currently, this practice appears to be blessed by the DOL.  You can allow the vacation/PTO bank to go in the negative (non-controversial) to keep it going, too.  Not all courts have signed off on the DOL's new interpretation.  In the past, partial day deductions were completely naughty.  It wouldn't hurt to check with consel who is familliar with and willing to make a prediction about your local circuit.  No great shockwaves on this yet.  Personally, I prefer using the disciplinary process and just preventing people from being out all the time.

If the vacation time is paid time off, it is completely legal.  The only time the DOL gets excited is when you deduct from an exempt employees PAY for an absence of less than 8 hours, for reasons other than safety violations. 

TXHRGuy:

Not all courts have signed off on the DOL's new interpretation.  In the past, partial day deductions were completely naughty. 

 

I agree that there has been a battle in the courts, but to date I don't know of one case that was decided where employers could not use leave in less than full day increments for exempt employees.  Now, in CA I know there are rules about this and I believe leave can only be used in minimum of a half day for exempts.  

 I don't know your definition of "new" TX but DoL has blessed partial day PTO use for several years.  Here's an opinion letter from back in '05.

 

http://www.dol.gov/esa/whd/opinion/FLSA/2005/2005_01_07_7_FLSA_PaidTimeOff.htm

 

3923855:

If the vacation time is paid time off, it is completely legal.  The only time the DOL gets excited is when you deduct from an exempt employees PAY for an absence of less than 8 hours, for reasons other than safety violations. 

That's not completely correct.

Right now, this practice is 100% acceptable by the DOL.  However, both the DOL and the courts have agreed in the past that partial day deductions of leave banks was naughty.  Now the DOL says it's OK, but not every circuit has had the opportunity to test that proposition.  The problem isn't that there have been cases popping up all over and nothing bad has happened.  The problem is that it's sitting out there unresolved in most if not all circuits.  If you are in a circuit that is normally inclined to read statutes particularly narrowly when they favor the employee (e.g., 9th), then the fact that this is acceptable under the regs but has not been tested under the statute/case-law-history suggests that it's not "completely legal".