California Wage And Hour Opinion Affecting Mandatory Furloughs And Wage Deductions

In a surprising decision issued on May 30, 2001, California's Chief Counsel

for the States' Division of Labor Standards Enforcement (DLSE) has interpreted

California's wage and hour law as prohibiting any deduction from the paycheck

of an exempt employee during any month in which that employee has worked,

provided the employee was ready willing and able to do so. The fact that there

is no work available does not provide an exception to the rule.

The opinion refers to the recently enacted AB 60, which received attention

because it reinstated daily overtime in California. The legislation also

amended Labor Code Section 515(a) to provide that to qualify as an exempt

employee in California, an employee must earn "a monthly salary

equivalent to no less than two times the state minimum wage for full-time

employment." While it is likely that this requirement was designed to

avoid exempt status for low-level managers, the DLSE has adopted an extreme

interpretation, by opining that this requires payment of a full, monthly

salary regardless of the number of days worked in any given month as long as

the employee was ready to work.

The opinion also expressly notes that an employer may not make deductions

from an exempt employee's salary for absence during a month in which he or she

works for disciplinary suspensions, jury duty, attendance as a witness in a

court proceeding, military leave, temporary plant shutdowns of less than a

month, work unavailability for less than a month, and disability due to

accidents or illness unless the employer has a plan or practice of providing

full compensation for salary lost due to illness which the employee has

exhausted. The opinion does not preclude wage deductions for partial month

absences due to voluntary absences for personal reasons.

The opinion also expressly closes any end-run attempt to avoid the law by

banning mandatory use of accrued vacation as a means to substitute vacation

pay for days lost due to mandatory furloughs. There is some inconsistency in

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