California Labor &
Employment Law Blog

Apr. 14 2010

Employers May Deduct From Exempt Employee Leave Banks for Partial Days

Topics: New Laws & Legislation, Wage & Hour Issues

California's Division of Labor Standards Enforcement recently issued a new Opinion Letter holding that partial day deductions from vacation or sick leave accruals for exempt employees whoare absent for a partial day are permissible under California law and do not cause the loss of exempt status for such employees. In addition, the Opinion Letter makes it clear that employers may deduct leave in less than four hour increments from sick leave and vacation banks. The Opinion Letternotes that in Conley v. PG&E, 131 Cal.App.4th 260 (2005), the court approved partial day leave bank deductions in four hour increments. However, the Opinion Letter explains that neither Conley, nor any California or federal regulationprecludes deductions from vacation or sick leave banks in increments of less than four hours.

The Opinion Letter cautions that although it is permissible to dock an exempt employee's leave bank for a partial day absence, itis notpermissible to dock an exempt employee's salary for a partial day absence. Exempt employees are entitled to a full day's salary for any day in which they perform work. Therefore, an exempt employeewho has no vacation or sick leave may not be monetarily affected if that employee takes a partial day off.

While the Labor Commissioner's Opinion Letter is limited to the facts and circumstances described in the employer's request, all California employers can draw guidance, more comfort and direction, when faced with exempt employees taking partial days off of work for personal reasons or due to sickness or the illness of their family members. The new guidance on the subject is consistent with federal law and provides employers more flexibility in making necessary deductions from exempt employees' vacation and sick leave banks during tough economic times to minimize the potential vacation pay paid out to employees at separation.

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For over 20 years, CDF has distinguished itself as one of the top employment, labor and immigration firms in California, representing employers in single-plaintiff and class action lawsuits and advising employers on related legal compliance and risk avoidance. We cover the state, with five locations from Sacramento to San Diego.

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About the Editor

Robin Largent has a regular presence in California state and federal courts and has been lead defense counsel and appellate counsel for large and small California employers in litigation (and arbitration) ranging from individual discrimination and harassment claims to complex wage and hour representative and class actions. She also leads the firm’s appellate practice, having substantial experience and success handling appeals, writ petitions, and amicus briefs in both state and federal court on issues such as class certification (particularly in the wage and hour arena), manageability and due process concerns associated with class action trials, exempt/non-exempt misclassification issues, meal and rest break compliance, trade secret/unfair competition matters, and the scope of federal court jurisdiction under the Class Action Fairness Act.
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