From the Hotline: Deducting Time off From Vacation if Sick Time Has Been Used
Question: We have a salaried employee who is taking too much time off for personal reasons and has no sick time left. Can we deduct the time from her vacation balance?
Answer: If you have a bona fide time off plan, then you may deduct from that plan for this exempt employee’s absences for personal reasons. When that time is exhausted, then you can deduct from the exempt employee’s salary in full day increments. If the employee works any part of the day, however, and the sick pay and PTO is exhausted, then you will need to pay her the full day’s pay for that day.
In cases like that, however, many employers continue to deduct from the employee’s time off plan balance (taking the number negative). That way, as the employee “earns” additional hours, they are deducted from the negative balance until the employer is “paid back.”