Winter Newsletter:

• Minimum Pay For Exempt Employees
• Can I Take Partial Day Deductions from Exempt EE's?
• Common Employer Mistakes
• Uh Oh!

Minimum Pay for Exempt Employees Increases <

Because the California legislature raised the minimum wage in California to $7.50 per hour effective January 1, 2007, the minimum salary employers can pay Exempt employees also increases. Remember…exempt employees must be paid at least two times (2x) the minimum wage, making their new minimum salary $31,200. If you have exempt employees making less than $31,200 annually…it is time to plan your salary adjustment effective January 1. For planning purposes, keep in mind that in 2008, the minimum salary will be $33,280.

Can I Take Partial Day Deductions from Except Employees? <

The California Department of Labor Standards and Enforcement (DLSE) has finally clarified what has been a confusing are for employers. Under limited circumstances, you can take partial day deductions of pay from an exempt employee:

• For a partial day of absence due to vacation or PTO provided the employee has enough time available when the absence occurs and the time off is for a period of 4 or more hours in a work day.
• For sick time when there is a sick pay bank and the absence was due to illness or injury provided the employee has enough time available when the absence occurs. If the sick pay plan provides a vested benefit that must be paid out at termination, the time off must be for 4 or more hours in a work day.

Common Employer Mistakes We See <

• 1. Not consistently designating leaves of absence appropriately or running mandated leaves of absence concurrently. Employers who have 50 or more employees are subject to the Federal Family Medical Leave Act and California’s Family Rights Leave Act. Under most circumstances, those leaves can and should be run concurrently. If the leave is due to a work-related injury—that leave can also run concurrent with CFR and FMLA. If the leave is for pregnancy disability (PDL), then PDL can run concurrent with FML and the employee may then be eligible for additional leave under CFR once she is no longer disabled due to pregnancy.
• 2. Employers are not providing the General Letter (Initial Letter) regarding COBRA benefits to employees when they first sign up for group health insurance benefits. ERISA regulations require that employees and their dependents be given a general letter regarding their COBRA rights should they experience a qualifying event in the future.
• 3. Misclassification of employees as Exempt (not subject to overtime.) An exempt employee is normally an executive, administrative or professional. Other classifications include computer professional, outside sales and commissioned inside sales and others. Job titles do not designate an employee as exempt or non-exempt. In California, exempt employees must earn a minimum of 2x minimum wage, must be primarily engaged in exempt work, and customarily and regularly exercise discretion and independent judgment.
• 4. Paying employees at time of termination. Employers must pay wages, including earned, unused vacation immediately when a) an employee completes a specific assignment or ends a fixed period of employment; b) is terminated involuntarily; and c) when an employee voluntarily quits with more than 72 hours notice. If an employee quits with less than 72 hours notice, the earned and unpaid wages are due and payable not later than 72 hours after the notice is given.
• 5. Failure to provide non-exempt employees a meal period by the end of the 5th hour of work in the workday—when that workday is 6 hours or longer.

Uh Oh! The Company lost this One!! <

Do you have a policy that clearly identifies who is authorized to use company equipment and in what capacity? If not….it’s time to develop and disseminate a policy.

In this real-life scenario, an employee who often used a company car for work purposes decided that he wanted to visit his mother during his meal period. He asked the staff person who was in charge of the company vehicles if he could borrow a car for a personal errand. The staffer gave him a set of keys and told him to return the car when he was finished. Unfortunately, on the way back from visiting his mother, the employee rear-ended another car.

The driver of the other car sued the worker and his employer for damages. The Company however, argued that it couldn’t be held liable since the employee didn’t have official permission from management to use the vehicle for a nonwork reason.

The company lost. The court ruled that the employee had implied permission to use the vehicle, making the company responsible damages, even though the employee was negligent. The staffer who gave out the keys had authorization to hand them out. It didn’t matter that he wasn’t a manager or that he allowed the employee to use the car for a nonwork purpose.