From the Experts: Ways to Handle Intermittent Leave for Exempt Employees

We have an employee who needs to take time off to care for a parent who is ill; however, she wants to take intermittent leave, and she is a salaried employee. How do we pay her?

Assuming that the salaried employee is classified as exempt under California law, how to pay this employee is complicated.

Ordinarily, exempt employees are paid a set salary regardless of the number of hours worked. If an exempt employee is not ready, willing or able to perform work on a full workday, the employer may deduct that full day from the employee’s salary. However, if the employee does perform any work on that day, they must be paid for a full day.

Options

In these circumstances, the employer may have a couple of options:

• First, if this leave is being taken under the California Family Rights Act (CFRA) and/or Family and Medical Leave Act (FMLA), those regulations allow for salary deductions for the intermittent time taken even during partial days.
• If the employee isn’t eligible for CFRA/FMLA leave, the employer decides whether the employee can take intermittent leave, and this decision sets a precedent for similar requests in the future. If the employer decides to allow this intermittent leave, they could change the status of the exempt employee to nonexempt and convert their salary to an hourly rate.

The employer can take the individual’s yearly salary, divide it by 2,080 (a full-time employee has 2,080 work hours in a year), and arrive at an hourly rate to pay the employee.

If the employer chooses this route, it will need to provide a Notice to Employee under Labor Code Section 2810.5 before making the change that sets out the pay rate for hours worked under this arrangement, amongst other information.

The employer should explain all of this to the employee, because some people do not want to be paid hourly. Going from exempt to hourly can be seen as a loss of prestige and create hurt feelings. Regardless of the employee’s desire to remain exempt, it is the employer’s sole discretion how to classify each employee.

Although some employers may be hesitant to take this step, an employee’s default status is nonexempt; the employee becomes exempt only upon proper designation by the employer.

Once the need for intermittent leave is over, the employer can redesignate the employee as exempt, assuming the position meets all the requirements for the exemption when intermittent leave ends.

Caution

Employers can get into trouble by trying to make an hourly employee exempt by paying them a salary without the position meeting all the requirements for an exemption. The rules on exemptions are specific, and designating an employee as exempt when they don’t meet the requirements of the exemption subjects the employer to possible additional wages and penalties.

Dana Leisinger, Employment Law Expert, CalChamber

CalChamber members can use the Exempt Status Evaluator on HRCalifornia to help determine if a job position should be classified as exempt or nonexempt. Not a member? Learn how to power your business with a CalChamber membership.