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Be Careful When Suspending an Exempt Employee without Pay

In a question posed to readers on the CalChamber of Commerce website HR expert Gary Hermann tackles the issue that does not have a whole lot of legal clarity…

Ques: Can an employer suspend an exempt employee without pay for disciplinary reasons?
Ans: Perhaps! (Maybe yes, maybe no)

If an employer suspends an exempt employee for less than a full workweek, the employee must be paid for the time, in order to maintain the employee’s exempt status. Both the U.S. Department of Labor and the (California) Labor Commissioner allow an exempt employee to be off a full workweek without pay.

Caution

Even if the suspension is for a full workweek, the Labor Commissioner raises the caveat that if such a suspension, without pay, reduces the employee’s monthly salary to an amount less than the statutory minimum, the exemption could be lost.

Employers also should be aware that if the exempt employee works part of the day, he or she must be paid for the whole day. Employers can fill in the missed part of the partial day, however, from available sick leave or vacation banks.

Criteria for Exempt Employees

California Labor Code Section 515 provides that executive, administrative and professional employees are exempt from overtime if they meet the established duties tests, customarily and regularly exercise discretion and independent judgment in performing those duties and earn a monthly salary of no less than double the minimum wage for full-time work.

As the current California minimum wage is $8 per hour, the statutory minimum would be $2,773.33 per month. On July 1, 2014, when the state’s minimum wage increases to $9 per hour, the minimum monthly salary for exempt employees will also increase—to $3,120.

The Labor Law Helpline is a service to California Chamber of Commerce preferred and executive members. For expert explanations of labor laws and Cal/OSHA regulations, not legal counsel for specific situations, call (800) 348-2262 or submit your question at www.hrcalifornia.com.

Gary Hermann, HR Adviser
CalChamber of Commerce

Posted in: News

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