Client Alert

The California Department of Industrial Relations Issues Opinion Letter Limiting Employers' Right To Make Deductions From The Salaries of Exempt Employees

June 01, 2001

George Abele, Steve Berry and Kirby Wilcox

To qualify as an exempt professional, administrative or executive employee under federal and state law, an employee, with narrow exceptions, must be paid on a "salary basis." On May 30, 2001, the Chief Counsel for the California Division of Labor Standards Enforcement issued an Opinion Letter regarding deductions from the salaries of exempt employees. The Opinion Letter makes significant changes to generally-recognized norms for interpreting the Labor Code and the Wage Orders of the Industrial Welfare Commission.

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