Opinion ID: 694147
Heading Depth: 3
Heading Rank: 1

Heading: The Salary Test

Text: 14 The regulations accompanying the FLSA define the scope of the salary basis test. Section 541.118(a) states 15 [a]n employee will be considered to be paid on a salary basis within the meaning of the regulations if under his employment agreement he regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. 16 29 C.F.R. 541.118(a). 17 Relying on this definition of the salaried employee, some courts have held that any policy which requires reductions in pay for absences less than a day 5 is repugnant to the concept of salary basis. Thus, if the public entity allows partial day docking, the employee is not, by definition, salaried. As a consequence, the exemption cannot apply. See, e.g., Kinney v. District of Columbia, 994 F.2d 6, 11 (D.C.Cir.1993); Michigan Ass'n of Governmental Employees v. Michigan Dep't of Corrections, 992 F.2d 82, 86 (6th Cir.1993); Abshire v. County of Kern, 908 F.2d 483, 486-87 (9th Cir.1990), cert. denied, 498 U.S. 1068 (1991). 18 Here, the district court found plaintiffs were not paid on a salary basis because [t]he compensation [they receive] is directly or indirectly subject to deduction for less than one day's absence from work. Appellant's App. Vol. I doc. 14 at 2. While it is true that certain employees testified they had to use accrued benefits, such as vacation or sick time, to cover absences less than a day, there was no evidence of a policy to decrease the actual amount of pay received based on those absences. In fact, the testimony was that the City did not dock pay. See Appellant's App. Vol. III doc. 19 at 76-77, 149-50. 19 Section 541.118(a) is very specific. It speaks of deductions in the amount of compensation as being contrary to the salary test. It does not exclude from salaried status those employees who must use accrued benefits to cover partial day absences from work. Absent a specific policy to reduce the amount of pay, as opposed to reductions in accrued benefits, there is no violence done to the salary basis concept. Barner v. City of Novato, 17 F.3d 1256, 1261-62 (9th Cir.1994). We agree with the court in Barner that a policy requiring public employees to reduce leave for partial day absences does not offend the salary basis test. The district court erred when it found otherwise. The City points out--and Plaintiffs do not contest--that captains and lieutenants were paid a regular biweekly amount in excess of $250 per week. Because this regular amount was not subject to reductions in pay, we hold that Plaintiffs were salaried. 6 20 This does not, however, end our inquiry regarding application of the executive exemption. The district court also held plaintiffs do not qualify as management employees under the duties test. In light of our conclusion that the district court erred when it held plaintiffs failed the salary test as a matter of law, we also consider the City's claims with regard to the second prong of the exemption.