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California labor law and employment contracts that contradict the law

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  • California labor law and employment contracts that contradict the law

    I'm new to payroll and am getting paranoid at violating labor law without knowing it since California is so specific and strict!

    Our company is thinking of stopping the accrual of executive PTO and just stopping time tracking for them altogether since they are truly exempt. I have been told by our HR consultants that the remaining PTO balance MUST be paid to the employee. My boss is insisting that we can have them sign a contract waiving their balances or donating them to the company or something. He basically told me that if you have a legal contract agreeing to something, it doesn't matter what the labor law says about it (this has come up about other issues as well). Is this true? If not, please provide any information I can show him.

    He wants to save the money by not paying out the PTO but I don't want it to cost us more in the long run if it turns out its not legal.

    I know there are certain rights that can be waived such as eligibility for overtime if you sign an agreement to work 4-10hr days, or whatever the CEO of google signed to receive a dollar annual salary (below minimum wage etc).


  • #2
    An employment contract cannot make employment law go away.

    PTO/vacation, once earned, CANNOT be forfeited in California.

    If you do not have a "bona fide sick pay plan" (and PTO would generally qualify if it's at least 5 days), you cannot dock the salary of exempt employees if they are absent for a full day due to illness or injury.
    specifically, paragraph 2

    The waiver for overtime for nonexempt employees for 4-10 hour days is not automatic. An Alternative Workweek plan must be voted on by a majority of the affected employees. It is not an employee-by-employee "waiver". And the plan must be submitted to/approved by the DLSE.
    (specifically, Section 3(B)

    There is no prohibition against tracking time for exempt employees and there can be some very good reasons for doing so, such as knowing when an employee is (at least) present in case of a building evacuation, or a claim of a work comp injury, and other situations.
    Last edited by Pattymd; 03-16-2009, 05:22 PM.
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


    • #3
      PTO/vacation, once earned, CANNOT be forfeited in California.

      I agree, but convincing the higher ups that they cannot just donate it the same way they would donate a house or car is not going to be easy without proof that attempts to do so have backfired. They see it as their property (the PTO balance) and that they should be able to do whatever they wish with it.

      Additionally, they offer vacation and/or medical benefits to part-time employees on a case-by-case basis. Is that legal or should the offering of benefits be an all-or-nothing case? If we have one person working 20-25 hrs a week, our medical plan allows us to offer medical benefits to someone working a minimum of 12 and we have another part time employee working 20-25 hours a week who is offered health coverage or an allowance for benefits if they opt out of our plan. Is it legal to not offer the same to the other part time employee? They are currently deciding its ok since the offer letter does not offer benefits. I just want to make sure we are not exposing ourselves to legal action. Is it legal? Is it legal but not a great idea?

      Vacation/PTO time has also been offered unevenly, some were negotiated as they were hired for a higher quantity, some were given a higher quantity during a review. Some were also given a flat amount per year to earn even though they are part-time while other part-time employees earn based on the number of hours worked. All full-time employees earn a flat amount per pay period whether they are hourly or exempt. Is any of that illegal? Is it just a bad idea? Or is it perfectly legal and not exposing us to legal action?



      • #4
        Regarding the PTO, it's a creative argument, but I doubt the DLSE would agree. And even so, it would create a taxable event.

        I am not a benefits expert by any means, but my understanding is that, if the employee meets the requirements of the plan document, they must be offered coverage or the plan, especially if the deductions are pre-tax, will fail.

        Vacation CAN be offered at different levels for different employees, because it is not governed by ERISA.

        Honestly, this guy sounds like he really wants to push the envelope and eventually it is going to come back and bite him.

        The company really, really, really needs to consult with an employment law attorney.
        I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


        • #5

          I agree with you 100%. Even if some contract can be drawn up that seems to legally allow what he wants to do, I'm betting a judge would overturn it.
          One of the executives is going through a messy divorce and I'm betting their spouse will want every penny and would not be ok with the PTO just being given back to the company. If any actions like that look fishy to the divorcing spouse, they could take actions that would trigger a full audit of our company and we'd end up paying a lot more in penalties if/when things are overturned. Not sure if thats 100% probable but I'd rather be safe than sorry.

          It always seems better to follow the law than to write contracts to bypass the law.

          I will urge him to consult an employment atty on these decisions.

          Thanks for your help!


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