Can an Employer Deduct Vacation Hours for Partial-Day Absences?

In this recent CA appellate case, the court confirmed that an employer may charge an exempt employee's vacation account for less than four hour partial-day absences.  The plaintiff's argued that his employer, General Atomics', could only deduct hours from his vacation balance if the employee partial-day absence exceed four hours.

Rhea v. General Atomics (CA4/1 D064517 7/21/14) Exempt Employees/Partial Day Absence Deductions

This appeals presents a challenge to General Atomics' employment practice of requiring exempt employees to use their annual leave hours when they are absent from work for portions of a day.  Although Conley v. Pacific Gas & Electric Co. (2005) 131 Cal.App.4th 260, 263 (Conley) established that California law does not prohibit an employer "from following the established federal policy permitting employers to deduct from exempt employees' vacation leave, when available, on account of partial-day absences," appellant Lori Rhea contends that Conley was wrongly decided, or in the alternative, that even under Conley, General Atomics is not permitted to deduct from an exempt employee's leave bank when the employee is absent for less than four hours. 

We conclude that Rhea's contentions are without merit, and accordingly we affirm the trial court's judgment in favor of General Atomics.

http://www.courts.ca.gov/opinions/documents/D064517.PDF

    

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New Court Decision - Commissioned Employee Exception

The Supreme Court of California just ruled on a case at the request of the United States Court of Appeals for the Ninth Circuit.

Peabody v. Time Warner should be reviewed by any employer who maintain a sales force that is compensated hourly near the minimum hourly wage and who's employees are are paid commissions on a monthly basis.

The facts as reported are that from July 2008 to May 15, 2009, Peabody was a Time Warner account
executive selling advertising on the company‟s cable television channels. Every other week, Time Warner paid $769.23 in hourly wages, the equivalent of $9.61 per hour, assuming a 40-hour workweek. About every other pay period, Time Warner paid commission wages under its account executive compensation plan.

Time Warner argued that commissions should be reassigned from the biweekly pay periods in which they were paid to earlier pay periods. It reasoned that the commissions should be attributed to the “monthly pay period for which they were earned.”  Attributing the commission wages in this manner would satisfy the exemption‟s minimum earnings prong that requires a minimum hourly rate of $12.00 per hour. 

The court concluded it may not do so. Whether the minimum earnings prong is satisfied depends on the amount of wages actually paid in a pay period. An employer may not attribute wages paid in one pay period
to a prior pay period to cure a shortfall.