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COBRA Subsidy Extended and New DSLE Letter on Deductions From Exempt Employee Leave Banks
Employment Law Group Update | 12/28/2009

COBRA EXTENSION – On December 21, 2009, President Obama signed into law the COBRA extension we reported on last week. Employees terminated by February 28, 2010 are eligible for the 65% subsidy. The subsidy has been extended from nine months to 15 months, and is retroactive for employees whose subsidy has already ended.

EXEMPT EMPLOYEE LEAVE BANKS – The California Division of Labor Standards Enforcement (DLSE) has issued a new opinion letter on the subject of exempt employee leave bank deductions. In the 2005 case of Conley v. PG&E, the California Supreme Court ruled that employers could deduct from the PTO and vacation leave banks of exempt employees in 4-hour minimum increments. (Note that for non-exempt employees, there is no minimum deduction except based on the employer’s smallest increment for timekeeping.)

The DLSE has now approved deductions of less than 4 hours from exempt employee leave banks, finding that the Conley opinion doesn’t expressly prohibit such deductions. Note that DLSE opinion letters are not law, and courts are free to disagree – therefore, we would advise that employers continue to apply a 4-hour minimum to any vacation or personal leave bank deductions for exempt employees. As for absences due to illness or injury, employers may reduce the sick time and PTO leave banks of exempt employees in less than 4 hour increments.

Remember that employers may never reduce the pay of exempt employees in less than full day increments, even if all leave banks have been exhausted.

For more questions regarding this issue, contact Jonathan Fraser Light or any member of the Firm’s Employment & Labor Law Group.