California Employment Law
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yes, exempt salaried employees
I just found some information that contradicts the above answer and I need help figuring out what is right. This is form an article dated May 2012:
A 2009 U.S. Department of Labor opinion letter regarding forced use of PTO for exempt employees during a plant shut down indicates the Wage and Hour Division’s position as follows:
“Since employers are not required under the FLSA to provide any vacation time to employees, there is no prohibition on an employer giving vacation time and later requiring that such vacation time be taken on a specific day(s). Therefore, a private employer may direct exempt staff to take vacation or debit their leave bank account […] whether for a full or partial day’s absence, provided the employees receive in payment an amount equal to their guaranteed salary.”
Employers restricting the use of PTO or forcing employees to use PTO should check state legal requirements prior to implementing such a policy. For example, a 2009 California DLSE opinion letter indicates employers must provide a minimum of a 90-day advance notice when requiring exempt employees to take mandatory vacation/PTO.
Tracy,Thank you for your reply. The information you have posted above is an interpretation of federal law without consideration to any additional employee rights that state law may impose. Indeed, California law is unique in its treatment of PTO because it regards XXXXX XXXXX such days as a "wage earned." Note that federal law has no such requirement (and neither do most states), and so under federal law, employees can be forced to use vacation or PTO at any time.Since PTO is considered a wage earned in the state of California and cannot be forfeited, that changes the analysis substantially, as an employee cannot be docked a PTO day for a day on which they are already entitled to be paid.This is why the analysis you have uncovered is incomplete for the purposes of a California employer. It fails to take into account the unique way in which California law treats PTO.I hope this helps clarify.
You have been very helpful. However I have a couple more follow up questions.
What if a company decides to be closed for an entire week, or even two weeks during the holidays? Are they allowed to not pay the salaried exempt employees in this situation and the employees must either use their PTO or not be Paid?
Also, if the company puts in their PTO policy that employees must save their PTO for the day after thanksgiving (or Christmas eve, or New years Eve, and so on) or not be paid, is this permissible? At a seminar I attended on paying exempt employees, the presenter said "I guess it could be possible to not have to pay the employees on the day after Thanksgiving if it was in the PTO policy that they must save their PTO for this day."
What is your interpretation on this?
Tracy,Thanks again for the reply. 29 CFR 541.602 states in part that "Exempt employees need not be paid for any workweek in which they perform no work."Thus, where an employer closes shop for just one day (e.g. for Thanksgiving) they cannot deduct from a salaried employee's pay. However, where the employer closes shop for a full week, that would constitute a "workweek in which [an employee] perform[s] no work," and thus a pro rata salary deduction would be permissible. Since an employee missing a full week would not be entitled to their regular pay for that week, the employer may deduct from PTO for the week, since doing so would not constitute a forfeiture of PTO but rather a substitute for days the employee would otherwise not be entitled to wages.I don't see how modifying your PTO policy to state that employees must "save their PTO" for Thanksgiving would change the legal obligation you have as an employer to pay salaried wages. To draw a comparison, an employer cannot write in their personnel policy that "minimum wage shall not apply" and expect their employees to now be exempt from minimum wage. The point is, simply modifying a company policy cannot serve as an excuse to violate California labor law.Furthermore, I should note that if the Labor Board were to find that you were making impermissible deductions from a salaried employee's wages (which is what you would essentially be doing by docking PTO on days for which the employee was already entitled to be paid) you may be putting their exempt salaried status at risk. The Labor Board could then say that since you are not treating the employee like a true salaried exempt employee, they are now an hourly employee. That could potentially result in exposure to a claim for unpaid overtime and/or wages, which would be very bad.I hope this all helps.
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