The California Department of Labor developed fairly clear guidelines under the federal Fair Labor Standards Act. Shortly thereafter the Division of Labor Standards Enforcement (Labor Commissioner) adopted similar policies for California employers. The following is a summary of the Labor Commissioner’s policies regarding making deductions from an exempt employee’s salary.
1. 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.
2. If an otherwise exempt employee performs no work during a full workweek, the employer does not have to pay the employee any salary.
3. If the employee does not get sick days, you cannot deduct anything from the salary if the employee takes a sick day.
4. 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.
5. 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.”
6. 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.
7. 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.
8. 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.
9. 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.
These policies are more strict than the Department of Labor’s polices under the FLSA. Because California employer must comply with whichever law is most strict, California employers should follow the Labor Commissioner’s policies.
If you have any questions about these policies or whether you company complies with the law, feel free to contact our office.
Original article by Robert E. Nuddleman of Phillip J. Griego & Associates