Many employers have chosen to designate some of their employees as exempt for purposes of overtime requirements as permitted by federal and state overtime laws. In most situations when an employer designates an employee as exempt, they must pay the employee on a salary basis. One of the costs of paying an employee on a salary basis is that the employer has limited ability to reduce the weekly salary of the employee when the employee does not perform work for part of the workweek. One of these limited exceptions involves personal leave. This exception for personal leave and how it works with paid vacation leave policies is discussed below.

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