Californians are struggling to cope with the significant losses and other challenges caused by the State''s devastating fires. Employers in some areas, principally San Diego, have been asked by civil authorities to shut down operations or to allow employees to stay at home. In some areas, utility interruptions or failures have disrupted business. A number of employers have elected to compensate their employees as if there has been no interruption in operations, while others have yet to decide the best course for their businesses. Regardless, employers are advised to be aware of the rules governing the compensation of employees in these circumstances. The rules for the payment of exempt and non-exempt employees differ significantly. The rules also vary depending on the circumstances surrounding the employee''s absence. The following is a brief overview of the general rules:

NON-EXEMPT EMPLOYEES

Employers are required to compensate non-exempt employees for all hours worked. If a non-exempt employee does not report to work (regardless of the circumstances), an employer has no obligation to pay the employee. Of course, an employer can permit such an employee to use accrued paid time off or vacation to cover such absences if consistent with policy.

For those employers who do elect to compensate their non-exempt employees for hours they have not actually worked, care should be taken to designate such compensation in such a way to avoid it being included in any overtime calculation. In addition, if certain non-exempt employees actually did work during these same periods, the employer may wish to address the issue of comparative fairness by paying those employees some additional bonus or gift.

The rules are different when non-exempt employees actually report to work and are not put to work or are provided with less than half their usual scheduled day''s work. In that situation, "reporting time pay" may be required. There are exceptions; an employer is not required to pay employees for "reporting time" when:

1. The employer''s operations cannot commence or continue due to threats to employees or property; or

2.  

3. The employer''s operations cannot commence or continue when recommended by civil authorities; or

4.  

5. Public utilities fail to supply electricity, water or gas; or

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7. There is a failure in the public utilities or sewer system; or

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9. The interruption of work is caused by an Act of God or other cause not within the employer''s control.

10.  

For example, if a non-exempt employee actually reports to work and is sent home because there is no electricity or the employer''s operations are shut down at the request of civil authorities, an employer has no obligation to pay the employee for "reporting time." On the other hand, if a non-exempt employee reports to work and is sent home because the employer independently wants the employee to be with his/her children, the employer may have an obligation to pay "reporting time." Specifically, the employee must be paid for half the usual or scheduled day''s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee''s regular rate of pay.

EXEMPT EMPLOYEES

An employee who is classified as exempt under one of California''s white collar exemptions must earn a monthly salary of no less than two (2) times the state minimum wage for full-time employment. The salary requirement is a minimum standard which cannot be undercut by an action initiated by an employer (e.g., a shutdown). Thus, employers should exercise caution and keep the following rules in mind when making decisions regarding salary deductions for exempt employees:

1. If an employer shuts down its operations for a full workweek due to the fires, the employer does not have to pay an exempt employee for that week, provided the employee still earns a minimum monthly salary of $2,340 (i.e., two times the minimum wage). In this situation, the employer cannot require an exempt employee to use PTO or accrued vacation because the employer could not provide nine (9) months notice to the employee.

2. If an exempt employee voluntarily absents himself or herself from work for a full workweek for personal reasons, the employer does not have to pay an exempt employee for that week, provided the employee still earns a minimum monthly salary of $2,340. In this situation, the employer can require an exempt employee to use paid time off or accrued vacation.

3. If an employer shuts down its operations for less than a full workweek and the exempt employee performs any amount of work during that workweek, an employer cannot make deductions from an exempt employee''s salary.

4. If an exempt employee chooses not to work or is unable to come to work (not due to employer direction) for a partial week, an employer cannot require an exempt employee to use paid time off or accrued vacation according to an opinion letter issued by the California Labor Commissioner in August 2002. Employers may ask exempt employees to agree to use PTO or accrued vacation for taking partial days or partial weeks off work. Without such a voluntary agreement, employers risk a ruling from the Labor Commissioner that such employees'' exempt status has been compromised.

Marie Burke Kenny is an Associate in Luce Forward, Hamilton & Scripps, LLP´s Labor and Employment Practice Area. She can be reached at 619.699.2408 or mkenny@luce.com,. Founded in 1873, Luce Forward is a full service law firm with offices in San Diego, Carmel Valley/Del Mar, Los Angeles and San Francisco.