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Are You Really Exempt from Overtime?

Exempt is as Exempt Does.

You may meet every test for exempt status, but if your employer docks your pay for various illegal reasons, not only you, but all other employees like you subject to the same policy, may be entitled to overtime py for all those extra hours of work over 8 in a day.

The general rule is that if a salaried exempt employee works part of a work-week, that employee is to be paid for the full week. [Back in 2001, Miles Locker, with the CA Labor Commissioner's office, issued an "opinion letter" that pay would be for a full month if the employee worked any part of the month! Predictably, Mr. Locker's position was not adopted by a more conservative Republican administration, and Mr. Locker was "reassigned"].

"Sitting by the Dock of My Pay, Watching the Overtime Roll Away"

Why does this "illegal docking" practice matter? Of course, for the individual employee, it is significant to be underpaid. For the larger employee community and for business generally, companies that have written or de facto "docking" policies could be required to pay big overtime awards in a class action or Business and Professions Code suit.

There are certain permissible exceptions to the requirement that an employee receive his or her full salary for any week in which he or she performs work. If the employee takes off a full day for personal reasons, he may be docked for that day. The key is "personal" and of course the duration must be the "full day". If the employee is off work a full day due to sickness, and there is a sick leave policy, he does not receive his or her regular pay, and if the employee willfully violates major, significant safety policies, he or she may be docked a day's pay as penalty.

On the other hand, here are some instances of illegal docking of a salaried exempt workers pay: The employee is punished for arriving to work late or leaving early. The employee's pay is deducted for damage negligently caused to the employer's property. The employee is punished for not working competently or vigorously enough (in the employer's opinion).

A common violation, I believe, is when a salaried employee is fired or laid off. What is the amount of termination pay he or she is to receive? Logically, the employee has worked a part of the work week and his not leaving his employment for "personal reasons". He therefore is entitled to the balance of pay for the "work week" immediately on termination. Employees should know the days that start and end the "work week" and not automatically accept pay ending on the termination date. An employee can obtain penalties equal to 30 days additional pay for failure to pay through the end of the work-week. [Labor Code Sec. 203].

If a salaried exempt worker works an hour or two in a day, then departs the balance of the day for "personal reasons", can the employer dock that part of the day's pay that was "personal". No. However, a Court of Appeal in California has held that an employer may exclude the "personal time" from the accrual calculation for vacation time without jeopardizing exempt status. (The complications are endless).

Conclusion: If illegal docking of pay is occurring, all exempt employees as a class could be reclassified to non-exempt, and their hours of overtime (calculated at an hourly equivalent rate equal to annual salary divided by 2080) could be sought for up to 3 years of accumulated overtime. As they say, "Do the math."

Employee Rights Attorney Frank Pray

5160 Campus Drive

Newport Beach CA 92660

949.251.1006

877.job.atty


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