On November 23, 2009, the California Department of Industrial Relations' Division of Labor Standards Enforcement (DLSE) issued an opinion letter on whether an employer may deduct vacation and sick leave time when an exempt employee is absent for either a partial day, or an entire day. According to opinion letter number 2009.11.23, a California employer may deduct accrued vacation and/or sick leave time (accrued personal time off) for a salaried employee's partial-day absence so long as the deduction is consistent with the employer's express written policies (e.g., employee handbook or manual). This opinion conforms to the opinion provided by the Department of Labor,

"Where an employer has a bona fide benefits plan (e.g. vacation time, sick leave), it is permissible to substitute or reduce the accrued leave in the plan for the time an exempt employee is absent from work, whether the absence is a partial or full day, without affecting the salary basis of payment, if the employee nevertheless receives payment of his or her guaranteed salary. Where the employee's absence is for less than a full day, payment of the employee’s guaranteed salary must be made, even if an employee has no accrued benefits in the leave plan and the account has a negative balance."

(DOL Opinion Letter FLSA2006-32 (September 14, 2006), emphasis added; see also DOL Opinion Letter FLSA2005-7 (January 7, 2005).)

According to the DSLE, while a California employer may require exempt salaried employees to use accrued vacation time, sick leave, and/or paid time off for partial-day absences if expressly set forth in their written employee policies, the employer is prohibited from docking the pay of an exempt salaried employee for a partial-day absence. See, Abshire v. County of Kern, 908 F.2d 483, cert denied, 498 U.S. 1068 (1991) [deducting an employee's salary for absences less than one day violates FLSA salary basis test]; Conley v. P.G.& E., 131 Cal.App.4th 260, 267 (2005); DOL Opinion Letter FLSA2007-6 (February 8, 2007) [partial day absences not expressly recognized by Part 541 regulations may render an employee's compensation not on a salary basis, thereby jeopardizing exempt status].)

To see how this opinion plays out under specific scenarios, please see the DLSE Opinion Letter Number 2009.11.23.

Although the courts are not required to follow the advice set forth in DLSE opinion letters, the courts often find DLSE opinion letters persuasive when interpreting California law.