California Clarifies the Salary Basis Test
Betsy Johnson at the Wage & Hour Defense Blog posted a detailed review yesterday of a new opinion letter from the California Labor Commissioner regarding the salary basis test. The opinion letter itself is a whopping 13 pages long. If you don’t have 2 hours and 3 cups of coffee to get you through it, here is what it says in a nutshell.
A company is free to make hour-for-hour deductions from accrued leave for partial day absences by exempt employees without violating the salary basis test. But they cannot make partial day deductions from salary.
For anyone who is not familiar with the nuances of California overtime law, the salary basis test requires employers to pay salaried employees a set rate for each day worked. If an employer makes salary deductions for sick time, the employer risks losing the overtime exemption not only for that employee, but all other salaried employees as well. This new opinion by the Labor Commissioner gives companies more leeway to make deductions from accrued leave for sick time, but partial-day salary reductions are still prohibited.
