Deductions from Exempt Employees’ Pay – Under California Law

Deductions from Exempt Employees’ Pay – Under California Law

Generally, both federal and state law provide that an exempt employee must be paid his/her full salary for any workweek in which he/she performs any work, regardless of the number of days or hours worked, subject to limited exceptions. California employers are cautioned to pay particular attention to this topic, as the state exceptions are narrower than the federal. The importance of this issue should not be underestimated since an employer who makes inappropriate deductions from an exempt employee’s wages may cause that employee and possibly the entire category of employees to lose their exempt status and then become eligible for overtime pay. Additionally, back overtime, taxes, fines, penalties, attorneys’ fees, and the risk of lawsuits can pose significant hardship for the employer.