The California Division of Labor Standards Enforcement or DLSE recently issued an opinion that would permit employers to deduct vacation and sick leave for an exempt employee’s absence of less than 4 hours, as long as the deduction is consistent with the employer’s written policies.
In addition, the letter permits a California employer to deduct a combination of paid sick leave and vacation for a partial-day absence.
This opinion letter does not have the force of law, and employers should wait to implement this policy until the California courts have ruled on the change in regulations.
This opinion letter represents a major change in California policy. In California, as in other states, an exempt employee who works part of the day is entitled to payment for the entire day. However, the issue was how that payment would be tabulated. The state has long held that an exempt employee who worked a partial day could not have sick or vacation time of less than 4 hours deducted from the employee’s balance. That policy was in opposition to federal law as interpreted by courts in most areas of the country.
Suppose Susan is an exempt employee who normally works 8 hours per day. One Tuesday, Susan works 6 hours and goes home early with the flu. In the past, a California employer would have to pay Susan for the entire day, and could not deduct 2 hours of sick leave or vacation from Susan’s balances. That has now changed.
In the past, California exempt employees were required to use sick leave and vacation in segments of 4 hours or full days. Now, an employer can count sick leave and vacation time in one-hour increments, if that is consistent with company policy.
In one example cited by the DLSE, an exempt employee was absent from work for a full 8-hour day. The employee had 5 hours of accrued sick leave and 2 hours of accrued vacation. Under the current guidelines, the employer could deduct 5 hours of sick leave and 2 hours of vacation from the employee’s balances. (However, the exempt employee is still entitled to payment for the full day, so the employer would essentially be paying for 1 unworked hour.)
