I am very confused by CA DLSE
51.6.18 Deductions From Other Amounts Owed The Exempt Employee. In as much as the salary obligation is owed to an employee except under the narrow exceptions listed in this Chapter, any salary payment to an employee from a source designed to pay some benefit to the employee other than one devoted exclusively to payment for leave due to sickness or accident would not meet the limited exception allowed.*.

If all my employer has is PTO (not leave exclusively devoted "for leave due to sickness or accident") when I am out sick, can my PTO (vacation) time be used?

Yes. That's exactly what a PTO plan is for; any general absence for whatever reason. How many days do you accrue per year?

PTO is about 15 days per year.

Then that's certainly reasonable under the FLSA, so I don't see anything in the law that would prohibit them from charging you PTO when you're out sick. The FLSA does not mean that the plan must be solely for sick time; it just hasn't been amended to include the term "PTO". It's the intent that is important and, again, that's what it's there for.

I thought the intent in CA was not for an employee to forfeit their vested wage benefit to meet the employer’s statutory obligation to pay the salary of Exempt employees “without regard to the number of days or hours worked in the workweek.” Isn’t that supposed to be the trade off for the Employer being relieved of the obligation to pay the O.T.?

Using a Sunday thru Saturday work week, if I work 8 hours each on Mon, Wed, Thurs & Friday then 6 hours on that Saturday, are you saying that CA Law says that in order to be paid for my full week I am required to take PTO for being out that Tuesday?

The Labor Commissioner's analysis was overturned in the Court of Appeals, thereby allowing the employer to charge PTO when an exempt employee misses a partial day of work. Conley v Pacific Gas & Electric.
http://www.hklaw.com/Publications/Newsletters.asp?IssueID=596

Charger411, what do YOU think PTO is to be used for?

It might help us answer you, if we understood where you were coming from.

The Labor Commissioner's analysis was overturned in the Court of Appeals, thereby allowing the employer to charge PTO when an exempt employee misses a partial day of work. Conley v Pacific Gas & Electric.
http://www.hklaw.com/Publications/Newsletters.asp?IssueID=596

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My apologies to everyone in advance, but as far as I can tell, people who quote the Conley decision maybe have not actually read the decision. As far as I can tell, the decision does not say what people seem to want it to say.

As far as I can tell, the issue is the case was the Conley's claim was basically as follows:
- The employer reduced his PTO balance in response to partial days not worked.
- Conley claims that while this action was legal under federal rules it is an illegal action under CA rules.
- Conley further claimed that because of this illegal action under CA rules that his Exempt status was lost, he became a Non-Exempt employee and is (retroactively) owed paid overtime.
- The court said that the CA rules said nothing about using the PTO vesting rules to forfeit the Exempt status. The exact wording is as follows:

"In sum, we find nothing in California law that precludes employers from following the federal rule that permits them to require the use of vacation leave for partial-day absences without causing otherwise exempt employees to become non-exempt under the salary basis test. Accordingly, we agree with the trial court that the proposed salary basis class does not share a plausible cause of action"

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What is apparently missing anywhere is the court decision is support for "The Labor Commissioner's analysis was overturned in the Court of Appeals, thereby allowing the employer to charge PTO when an exempt employee misses a partial day of work" statement that people keep making. Perhaps someone can show me just where in the court decision they are getting that from.

A pointer to the actual court decision is attached.

http://fsnews.findlaw.com/cases/ca/caapp4th/slip/2005/a105832.html

OK, DAW, I'll bite. It seems to me that if charging partial-day absence to vacation/PTO does not cause the employee to lose the exempt status, then it is permissible to do so. I would have thought that, if such action was prohibited altogether, the decision would have said so. What am I missing here?

Your post says "The Labor Commissioner's analysis was overturned in the Court of Appeals, thereby allowing the employer to charge PTO when an exempt employee misses a partial day of work."

Where does it say that in the court decision?

I am suggesting that losing Exempt status because of reducing the PTO balance and the employers legal ability to reduce previously earned PTO balances previously vested under CA rules are two seperate *unrelated* issues. I am suggesting that the CA rules against reducing vested PTO balances for Exempt employees for partial days not worked are still in force and that employers who reduce vested PTO balances on Exempt employees for partial days worked will probably still lose if their employees challenge them on this.

Conley was not asking for his deducted PTO back. Conley was asked for paid overtime due to a supposed violation of the Exempt rules. Conley *lost* his case. How does this result in the CA PTO rules being overturned?

Okay, Patty and DAW. Enough for now. Let's let the California attorneys settle this.

Megan, Michael, can one of you address DAW's question, please?

I wasn't fighting, honest. ;) I was asking why DAW made the interpretation he/she did. I do hope Megan or Michael chime in.

I don't get your argument at all, DAW. To the best of my recollection, the opinion letters in question stated that docking PTO banks for partial day absences would endanger the employee's exempt status. It was not a question of a forfeiture of vested PTO time. Generally I will make any argument I can in favor of an employee, but saying that the employer can't charge the employee's PTO account when they are absent for personal reasons doesn't pass the laugh test for me.

OK. Lets start at beginning with the Holland and Knight article quoted by Patty. We have a California law firm with a published article on their website saying that in their opinion there at least used to be such a rule.

"In California, however, the Labor Commissioner has taken the position that because in California, accrued vacation time is considered to be vested wages, California employers cannot deduct accrued vacation time (or paid leave) from their employees' accrued vacation time accounts in amounts of less than a full day"

The point of the Holland and Knight article I have a problem with is their claim that the Conley court case has invalidated the Labor Commissoner position and that as a result of the Conley decision it is *now* ok for employers to reduce PTO balances for Salaried Exempt employees in response to this court decision. I am not saying the H&K is wrong, but I am saying that I have repetively read the H&K article and Conley decision and that I cannot find support for their statement.

Is there any possibility I can get you to actually read the H&K article and the court decision?

http://www.hklaw.com/Publications/Newsletters.asp?IssueID=596

http://fsnews.findlaw.com/cases/ca/caapp4th/slip/2005/a105832.html

The article states:

"the Court concluded that the employer was not deducting an employee's wages because of an employee's partial-day absences[by requiring them to use PTO]"

I agree that the article is not as clear as it could be, but both the case and the article rest on an understanding of the underlying opinion letters (which are no longer available on line). The opinion letters said that, since PTO is vested, using that PTO would cause a reduction is salary, defeating the salary basis test and thus losing the exempt status. It did not say that employers could not require the use of PTO, just that doing so would make them incur liability for overtime.

Ok now that I have the attention of the CA Lawyers (and I just read all the links offered thank you) I wish to ask for clarification of my earlier point(s) and submit a few other related questions:

#1) Using a Sunday thru Saturday work week, if I work 8 hours each on Mon, Wed, Thurs & Friday then 6 hours on that Saturday, are you saying that CA Law says that in order to be paid for my full week I am required to take PTO for being out that Tuesday?

#2) If I have 6 hours available in my PTO bank and I am out due to illness for a day, can my employer legally use those 6 hours of PTO to give me the equivalent of 6 hours pay and deduct the other two hours from my pay as unpaid time?

#3) what if I have no PTO remaining can they reduce my salary (allowing my weekly salary to fall below the minimum 2x CA minimum wage level)…for the entire day without jeopardizing the Exempt Status?

And finally Last month my employer announced that as of 7-9-2006, dozens (perhaps hundreds) of positions that HR felt were "gray area" or "borderline exempt" (definition = never did qualify as "exempt" under State or Federal laws) would now be compensated hourly and considered non-exempt. Since I have been openly contesting the bogus “Exempt” status for nearly a year, I asked in that meeting if back O.T. would be paid to retroactively compensate those employees that had been misclassified all along [since the laws did not change - only the company's desire to comply with them.]. The answer was a resounding NO. In my case, 2 women in my unit who do the exact same job as I do have been paid hourly and overtime since I transferred into the department. Aren’t they (the employer) still liable for the back O.T. wages for those of us who were illegally classified as Exempt?

They are liable for back overtime- but you might be running against a statute of limitations, especially if you have been misclassified for more than 3 years. I would urge you to contact an attorney about this.

Sick time in CA is the same as the federal. You can deduct for a full day's absence if the employer had a bona fide sick day plan and the employee has exhausted all leave under that policy. You can deduct partial day absences from the sick account. If the sick account is a PTO account that includes vacation, you can not deduct for partial days less than 4 hours. If it is just a sick account, then you can.

1) Michael is looking for a test case for this theory, but so far it seems like they can.
2) Yes.
3) Yes.
4) If your weekly salary is so low that a day off unpaid is going to put you under $540 for the week, then I would suspect you are misclassified- there aren't many truly exempt jobs in California that pay less than $35k.

OK you just said the employer can deduct for full day sick time and yet you said yes to my question about deducting 2 hours as unpaid for time out that exceeded PTO time available?? I'm confused. My employer has only PTO not separate a sick time plan.

This area is not my strong suit- forgive me if I was unclear. The difference that the PTO makes is for partial day absences, not full day absences. If there is a bona fide sick or PTO plan, and that time has been exhausted, then the employer can dock pay.

No need to apologize, I very much appreciate your take on these issues.

I will only address the following:

Your post says "The Labor Commissioner's analysis was overturned in the Court of Appeals, thereby allowing the employer to charge PTO when an exempt employee misses a partial day of work."

Where does it say that in the court decision?

The decision specifically states, "Thus, to the extent that the DLSE advice letters support appellants' interpretation of Suastez, we respectfully disagree with their analysis for the reasons we have already explained."

The appellant's interpretation of Suastez was that partial day use of PTO was not allowed. There were several DLSE opinion letters that appellant (Conley) introduced. The DLSE has since depublished these opinion letters.

As a final note, I will point out that this is just one Court of Appeals' opinion. I do not think it was well reasoned, and it has many limitations. For instance, it only allows for partial day docking of 4 or more hours. Thus, the result for less than 4 hours remains unclear. Why the court felt a need to make this distinction remains a mystery as their analysis clearly follows the federal rules wich allows for shorter periods of PTO being used.

I downloaded the current (March 2006) verision of the CA-DLSE Enforcement Policies and Interpretations Manual. I found two sections that specifically address these issues. Unfortunately, the two sections seem to contradict each other.

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51.6.15

Any Work Performed In The Time Period Will Preclude Reduction Of The Salary. If an exempt employee performs any work during the work day, no deduction may be made from the salary of the employee as a result of what would otherwise be a “partial day absence.” (See discussion at Section 51.6.8 of this Manual; also see O.L. 2002.04.08). However, on June 21, 2005 the First District Court of Appeal, Division 2, decided Conley v. PG&E. One of the issues decided was whether an employer can deduct for partial day absences of four hours or more from an employee’s vacation pay bank, when the employee is salaried exempt. The court held that under the facts of PG&E’s vacation pay policy, where the company only deducted for absencesof 4 hours per day or more, there was nothing in California law which prohibits this practice. This enforcement policy is consistent with that of the U.S. Department of Labor. (See, Wage and Hour Division, U.S. Department of Labor, Opinion Letter dated July 21, 1997). The same rule would apply in a situation where an employer has chosen to close his or her business or otherwise failed to provide work for a full week, the exempt employee is entitled to recover wages for the full week if that employee is suffered or permitted to work anytime within that workweek.
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51.6.15.4
DLSE Enforcement Position. The DLSE adopts the above interpretation by the DOL regarding partial day absences unless the accrual which the employer utilizes provides a vested right to wages (a vacation policy in California by law must provide for the vesting of the wages accrued as they are earned and, thus, vacation accrual may not under any circumstances be used to pay for partial day absences). Another example would be some sick leave policies which provide for recovery of unused sick leave as wages upon term ination or during the course of the employment.*
...
*The interpretation of the federal regulation which allows sick leave (paid leave time) to be utilized turns on the fact that the terms “amount” and “compensation” contained in the federal regulation refer to “cash” and not to other types of compensation – which the federal courts lump together as “paid leave time”. (See Barner v. City of Novato, 17 F.3d 1256, 1261-62 (9th Cir.1993) The Ninth Circuit did not directly address the question of what would be the result if what they referred to as a “benefit” was actually vested and could be drawn on as cash. The only logical legal conclusion would be that such vested “wages” which the employer was obligated to pay could not be forfeited for the purpose of meeting the employer’s obligation to pay the salary for absences of less than one day. Nonetheless, if the sick leave is simply “paid leave time” and cannot vest as wages either at termination or during the employment, that sick leave accrual may be deducted for partial day absences due to illness.

I read all this stuff from the DLSE Manual several times and also:

51.6.18
Deductions from Other Amounts Owed the Exempt Employee. In as much as the salary obligation is owed to an employee except under the narrow exceptions listed in this Chapter, any salary payment to an employee from a source designed to pay some benefit to the employee other than one devoted exclusively to payment for leave due to sickness or accident would not meet the limited exception allowed.*.

Which Pattymd responded “The FLSA does not mean that the plan must be solely for sick time; it just hasn't been amended to include the term "PTO". It's the intent that is important and, again, that's what it's there for.”

I never did ask why Pattymd was attempting to explain what the FLSA’s intent was re: a statement that I quoted from the DLSE Manual, but I would think that there is some reason that they (whoever “they” are DLSE or FLSA) have a reason for making the distinction: “........ other than one devoted exclusively to payment for leave due to sickness or accident would not meet the limited exception allowed."
…but then again you people are the Legal Minds – I’m just trying to get my greedy employer to pay me correctly what the law allows. :eek:

If I can make a possible radical suggestion, why not contact CA-DLSE directly? Maybe even get a Private Letter Ruling that you could share with the rest of use that makes sense of this?

Your employer may or may not be greedy, but IMO your employer has a right to be confused.

That is an excellent idea (and one I knew nothing about- the private letter ruling) How does that work? And do I have to go through the local DLSE to obtain such?
I only ask because my personal experience with the San Diego DLSE office (on behalf of a friend 18 months ago) left me with the opinion that the Deputy Commissioners assigned there would need to vastly improve just to qualify as “totally incompetent”. They did not know the laws or even what was in their own pamphlets re: basic rules of DLSE procedure as to who could speak on behalf of a claimant. Until I showed these folks their own handouts (which they had mailed to my friend) they attempted to tell him that in order to be granted an informal hearing- first he needed to hire an Attorney to assist in presenting their claim – which is totally wrong. And there were other things like in a letter they stated "the employer had every right to reduce a final paycheck" of this employee for petty cash this employee had no access to but which allegedly came up missing 2 weeks after the employee was laid off. Also, though this employee clearly had a written contract of employment (signed by the owner of the company) listing mutually agree upon days, hours, salary and a commission structure, the local DLSE wrote him a letter stating that he (the employee) had the burden of proof to substantiate that he was not an independent contractor rather than an employee. These issues are pretty basic and I find it inexcusable that these DLSE people were so blatantly misinformed on the laws they are entrusted to enforce.
So can my local office be bypassed somehow to obtain this Private letter ruling??

I can give you part of an answer. The following website is where you go to find published opinion letters issued by CA-DLSE. I would like to think that if you hunted around this website you could find the rules for requesting an opinion letter, or at least a phone number to call.

Also Private Letter Ruling is what IRS calls these things. CA-DLSE apparently calls them Opinion Letters.

http://www.dir.ca.gov/dlse/OpinionLetters-bySubject.htm

Thank you DAW (and everyone else) for contributing your knowledge, opinion and expertise on this subject matter. :)
I’ll get to work and let you know what I encounter by posting updates as soon as I have anything to share.
Please do post any other information that you may have to contribute in the meantime.