California DLSE Reverses Itself Regarding Schedule and Salary Reductions for Exempt Employees
The California Department of Labor Standards Enforcement (DLSE) has issued an opinion letter in which it concludes that California law does not prohibit an employer from temporarily reducing the work schedule of an exempt employee from five days a week to four days a week, and correspondingly reducing the employee's salary by 20 percent. The employer in question was experiencing significant economic difficulty and wanted to temporarily reduce the schedules and salaries of exempt employees to avoid or limit the need for layoffs. The DLSE concluded that this practice does not violate the salary basis test and the affected employees would not lose their exempt status.
Although this conclusion is consistent with well-settled principles of federal law, it represents a reversal of the DLSE's opinion. The DLSE reached the opposite conclusion -- that an employer cannot reduce the salary of an exempt employee during a period in which the company operates a shortened workweek due to economic conditions -- in a 2002 opinion letter. The 2002 opinion letter relied on a federal court decision that the DLSE now characterizes as "not well-reasoned and misguided."
Although DLSE opinion letters are not binding authority, California courts usually give them a great deal of weight. Additionally, DLSE opinion letters provide insight into how the DLSE will interpret the law in cases it pursues as California's wage and hour enforcement agency.
Cosmetology Teachers, Not Day Care Teachers, Overtime Exempt
Cosmetology teachers, but not day care teachers, are exempt from the Fair Labor Standards Act's (FLSA's) overtime and minimum wage rules, according to two recent opinion letters from the Department of Labor.
The FLSA contains an exemption for professional employees, including any “teacher in elementary or secondary schools.” Cosmetology teachers qualify for the exemption, according to the DOL, because they teach in an accredited secondary school and because their primary duty is "teaching and instructing students in cosmetology theory." Yes, you read that correctly: cosmetology theory. Click here to read the DOL's opinion letter on cosmetologists.
Day care teachers, on the other hand, do not qualify for the exemption because they do not teach in a qualifying institution. According to the DOL, “[u]nless the daycare center provides grade school curriculums, introductory programs in kindergarten, or nursery school programs in elementary education of the sort described in [the act], the instructors are not within the scope of the teacher exemption of the FLSA.” Click here to read the DOL's opinion letter on day care teachers.
What lesson can we learn from these opinions? The FLSA exemptions are highly technical and not always intuitive. If you are classifying your employees as FLSA-exempt, not only should you make sure the employees meet all of the duties tests under the statute and regulations, but also that your organization meets any requirements that may be imposed as well. For more guidance on the FLSA exemptions, read this compliance guide on the FLSA from our friends at the DOL.
