The BP Blast!: A California Employment Law Blog

THE DLSE CLARIFIES POSITION REGARDING PARTIAL DAY DEDUCTIONS FOR EXEMPT EMPLOYEES

The DLSE Has now clarified its position on partial day deductions for exempt employees
The California Division of Labor Standards and Enforcement (DLSE) recently updated its Enforcement Policies and Interpretations Manual to authorize employers to make deductions from an exempt employee's accrued vacation or paid time off (PTO) bank for partial day absences under certain circumstances. This change follows a California Court of Appeal’s decision rendered in July 2005. See, Conley v. Pacific Gas & Electric Co., 131 Cal. App. 4th 260 (Ca. App. 1st Dist., 2005).; DLSE Enforcement Policies and Interpretations Manual sec. 51.6.15.4.)

The DLSE's year long delay in accepting the court's holding caused many California employers to be confused and/or extremely cautious about changing their policies on partial day absences for exempt employees. However, in July 2006, the DLSE finally amended its manual (section 51.6.15.4) and adopted the Conley Court's decision. The DLSE Manual now provides that employers may deduct partial day absences from an exempt employee's accrued vacation/PTO bank for employee absences of 4 hours or more. These rules do not apply to sick leave banks.

Employers should keep in mind the current state of the law on partial day deductions is based on one Court of Appeal decision and the DLSE’s Enforcement Manual. While most courts consider the DLSE’s position on a wage and hour issue to be persuasive, it is not binding. In addition, different California Courts of Appeal may rule differently than the First District in Conley, setting up a California Supreme Court showdown. Employers should contact employment law counsel before making any partial day deductions from exempt employees’ vacation or PTO bank.