In order to be properly classified as an exempt employee under California law (i.e., exempt from overtime and meal/rest break requirements), the employee must, among other things, be paid on a salary basis (other than exempt salespeople who may be paid on a commission basis, and exempt computer programmers or exempt physicians who are paid on an hourly basis). In order to satisfy the salary basis test, exempt employees must, among other things, be paid their entire weekly salary, without deduction, for any work week in which they perform services. There are a few exceptions to this rule, however, one being that an exempt employee’s salary may be deducted for any full day off of work (when the day off is taken at the employee’s election) when the employer has a bona fide paid sick leave or paid vacation policy in force.
The question is, what happens if an exempt employee wants to take a partial day off? Can the employer with a bona fide vacation or sick leave policy deduct from such employee’s pay for the hours missed? The answer is no, the employer cannot deduct any pay from the exempt employee’s salary for a partial day off. However, if the employee has accrued but unused sick time, or accrued but unused vacation time, the employer can sometimes deduct sick or vacation time from those “banks” base on exempt employees’ partial day absences.
But be careful, because the rules related to sick leave and to vacation time are different. If the exempt employee has sick time in her bank, and if the employee’s time off is for reasons qualifying for sick leave, then the employer may deduct from the sick time bank to replace the employee’s pay for a partial day’s absence of any length (even for 1 hour or less). However, if the employee does not have sick time but does have vacation time, then the employer may deduct from the vacation time bank to replace the employee’s pay for a partial day’s absence, but only if the partial day absence is for 4 hours or more. If the employee has vacation time, but the partial day absence is for less than 4 hours, then the employer may not deduct from the vacation bank.
Remember, you can never deduct from salary for partial day absences of an exempt employee. You can only deduct from a sick time bank or vacation time bank, and then only as set forth above. –Adam K. Treiger