Daily Blast July 21, 2014

The California Court of Appeal, Fourth Appellate District, Division One (San Diego), published its opinion in Rhea v. General Atomics (July 21, 2014, D064517) ___ Cal.App.4th ___, analyzing whether an employer may require “exempt employees to use their annual leave hours when they are absent from work for portions of a day.” (Slip opn., pp. 1-2.) The Court of Appeal agreed with the opinion issued by the Court of Appeal, First Appellate District, Division Two, in Conley v. Pacific Gas & Electric Co. (2005) 131 Cal.App.4th 260, 263 (“Conley”), that there is “no basis in California law for concluding that an employer is prohibited from requiring exempt employees to use their vacation or leave time when they are absent from work for a partial day.” (Slip opn., p. 21.)

The Court of Appeal explained that the dispute in this case “is whether, under California law, an employer may set a policy requiring that exempt employees use their vacation or leave time—rather than monetary pay—when they are absent from work for partial days.” (Slip opn., pp. 9-10, italics in original.) Conley, the only case law addressing the issue in California, concludes that “‘nothing in California law . . . precludes employers from following the federal rule that permits them to require the use of vacation leave for partial-day absences without causing otherwise exempt employees to become nonexempt under the salary basis test.’” (Id. at pp. 10-11 quoting Conley, supra, 131 Cal.App.4th at p. 271.) Although Conley does not expressly include an absence of less than four hours, the court “perceived nothing in Conley’sanalysis to suggest a . . . different result . . . .” (Slip opn., p. 21.) The court concluded that Conley was not wrongly decided and explained that employees “‘do in fact receive all of the paid time off they have earned—they must simply use that accrued vacation time to make up for partial-day absences.’” (Id. at p. 15 quoting Conley, supra, at p. 270). Thus, “the employer’s policy requiring that vacation time be used for partial-day absences ‘neither imposes a forfeiture nor operates to prevent vacation pay from vesting as it is earned. All it does is regulate the timing of exempt employees’ use of the vacation time, by requiring them to use it when they want or need to be absent from work . . . .’” (Ibid., italics in original.) Accordingly, the court concluded that “regardless of whether the absence is at least four hours or a shorter duration, a requirement that exempt employees use Annual Leave time for a partial-day absence does not violate California law.” (Slip opn., pp. 21-22.)

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