On November 25, 2009, the Department of Labor Standards and Enforcement (DLSE) issued an Opinion Letter clarifying how and when a California employer may deduct for a full and partial day absence from an exempt salaried employee’s accrued paid time off (vacation and sick leave bank). Pursuant to California law, an exempt employee must receive his or her full salary for any week in which the employee performs any work without regard to the number of days, or hours worked. DLSE Manual § 51.6.8-51.6.9 and 29 CFR §541.602(a). Thus, under California law, it is illegal to dock the pay of an exempt employee for a partial day absence. However, under both federal and California law, the employer is permitted to dock the pay of an exempt salaried employee when the employee is absent from work for one or more full days for personal reasons other than sickness, or disability (29 CFR § 541.602(b)(1); DLSE Manual §51.6,14,3.) and for absences of one or more full days caused by sickness, or disability (including work-related accidents), if the deduction is made from a bona fide plan, practice, or policy of providing compensation for such sickness or disability (29 CFR § 541.602(b)(2); DLSE Manual § 18.104.22.168.)
California employers may deduct time for a partial day absence from an exempt employee’s accrued paid time off, if the Company's vacation policy requires its employees use their vacation hours for illness when the employee does not have any more accrued sick days. According to the DSLE Opinion Letter, while a partial day absence cannot be deducted from an exempt employee’s salary, such an absence may be deducted from accrued paid time off, accrued vacation time, or fringe benefits without affecting the employee’s status as a salaried exempt from overtime employee.
Please note that an employer is prohibited from docking a salaried exempt employee’s pay for a partial day absence even if the employee has no accrued leave, and doing so may lead either the court or the Labor Commissioner to conclude that the employee is not exempt from overtime.
Here's a summary to help you out...
-Employees exempt from the overtime requirements of California law under the Professional, Administrative or Executive exemptions must be paid a salary. This means the employee must receive the same amount of pay regardless of the number of hours worked each week.
-If an otherwise exempt employee performs no work during a full workweek, the employer does not have to pay the employee any salary.
-If the employee does not get sick days, you cannot deduct anything from the salary if the employee takes a sick day.
-If an otherwise exempt salaried employee absents himself or herself for a full day or more on personal business, such absence may be deducted on a pro rata basis from the salary owed.
-If an exempt employee performs any work during the work day, no deduction may be made from the salary of the employee as a result of what would otherwise be a “partial day absence.”
-If the employer has a PTO policy (as opposed to a sick leave policy), and the exempt employee exhausts the PTO, the employer can deduct the salary for partial day absences as long as the absence is at least four hours.
-No deduction may be made from the salary of an exempt employee for absences occasioned by sickness or accident unless the absence for sickness or accident exceeds the weekly period.
-Deductions may be made for absences in increments of full working day occasioned by sickness or disability (including industrial accidents) if the deduction is made in accordance with a bona fide plan, policy or practice of providing full compensation for loss of salary occasioned by both sickness and disability and the employee has exhausted his or her leave under the policy. In other words, an employer cannot deduct for sick days unless it first gives the employee some sick days to exhaust and the employee in fact exhausts those sick days.
-No Deduction From The Employee’s Salary May Be Made For Absences Occasioned By The Employer Or By The Operating Requirements Of The Business if the absence is less than a week. (i.e., if the employer shuts down the office for two days). If the employee is ready, willing and able to work, deductions may not be made for the time when work is not available. If the office closure is a full week, the employer does not have to pay employees for that week.
You can also read the Opinion letter here.
As always, please call Daneshvar Law at (323) 850-5801 or email us at info@DaneshvarLaw.com to help you comply with current labor and employment laws.