Labor Employment Law Blog

On July 21, 2005, in Conley v. Pac. Gas & Elec. (2005) __ Cal.App.4th __, 2005 WL 1693801, the First District Court of Appeal decided an issue of first impression in California wage and hour law: whether an employer's policy of charging its exempt employees' vacation leave banks for partial-day absences (4 hours or more) from work renders all of those employees non-exempt as a matter of law under the salary basis test. The good news for employers is that the answer is no. In affirming the trial court's denial of class certification for a proposed salary basis class of exempt PG&E employees, the Court of Appeal held that, consistent with federal policy, PG&E's practice of deducting partial-day absences from vacation leave does not violate California law. 2005 WL 1693801, *1.

California and federal law contain overtime pay exemptions for executive, administrative and professional employees. In order to qualify as exempt, employees must meet requirements regarding their duties and salary. For example, they ordinarily must spend over half their time on exempt duties and receive a minimum amount that is paid on a "salary basis." Currently, the minimum is $28,080 a year under state law.