The California Industrial Welfare Commission recently took long-awaited action regarding a controversial opinion letter about salary docking for exempt employees. Here’s what happened.
Exempt Pay Docking Rules Clarified
Earlier this year, California employers were shaken up by a Division of Labor Standards Enforcement opinion letter stating that under California’s new overtime rules, exempt employees had to be paid their full salary if they performed any work in a month. The opinion also said that you couldn’t require exempt workers to use accrued vacation time instead of salary when no work is available, even if your business was closing temporarily as a cost-cutting measure. The letter sharply contrasted with the federal rule that says an exempt worker’s salary must be paid if any work is done in a week. The opinion was quickly withdrawn following an outcry from the business community.
Now, the IWC has voted to amend the “statement of basis” in Wage Order 5 (Public Housekeeping) to reflect its view that California follows federal pay docking rules. The new statement essentially conforms state and federal law by permitting employers not to pay exempt employees for any full week in which they performed no work. Although it only amended Wage Order 5, the commission stated that it intended this interpretation to apply to all wage orders.
Controversy Continues
This latest IWC action hasn’t laid to rest the controversy generated by the original opinion letter. The IWC has scheduled a hearing for December 7 to investigate the opinion letter’s effects on the executive, administrative and professional exemptions. Critics and at least one commissioner have questioned whether the IWC has the authority to act on the salary docking issue, and some have asserted that interpretation of California pay docking rules should be left to the courts. Legislation that would have permitted staff reductions for a week without violating California’s wage rules died on the Senate floor. We’ll keep you posted.
New Rules For 24-Hour-Care Attendants
The IWC also adopted new overtime and maximum-hour rules for 24-hour-care attendants. Wage Order 5 was amended to include special overtime pay rules for employees in 24-hour residential care facilities with direct responsibility for children under age 18 or in the foster care system. These workers must be paid 1) one and a half times their regular pay rate for all work over 40 hours in a workweek; 2) two times their regular pay rate after 48 hours; and 3) two times their regular pay rate after 16 hours in a workday. Also, these employees must have a block of at least eight hours off before they can work more than 24 consecutive hours. Time spent sleeping doesn’t count as hours worked.
The amendment also spells out special meal and rest-period provisions for these employees and others who work in residential care facilities for the elderly, blind or developmentally disabled.