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Companies Can Ask Plenty of Their Exempt Employees

December 29, 1996

Q: I recently accepted a senior management position with a small commercial bank. After starting work I have learned of the following personnel practices:

1. The probationary period for nonexempt employees is 90 days, while it is six months for exempt employees. Probationary employees are not paid for holidays that occur during their probationary period.

2. Exempt employees are required to record their daily starting and ending times, as well as lunch periods, in a log and are required to work at least eight hours per day.

3. All employees are expected to work at least two Saturdays a month. While nonexempt employees receive overtime pay, the exempt employees receive neither overtime nor compensating time off.

4. Various employees are, on occasion, required to drive between the three branches during the day but are not reimbursed for the mileage expense.

The bank's personnel policy disclosed the probationary period but does not mention the other practices. Are these practices legal?

--J.B., Fullerton

A: Apparently you learned of these workplace problems after you started working for your employer. If the company had informed you before the start of your employment that the practices were different, you might have had a claim for breach of contract or even fraud.

The answers to your questions:

1. An employer is entitled to define the probationary period for each class of employee. Employers are not required to compensate any employees for holiday pay. If, however, the employer promises to pay for holidays, probationary employees can he excluded from that benefit.

2. Federal rules require that exempt workers be paid on a salary basis. Specifying starting and ending times is inconsistent with exempt status.

There is certainly nothing wrong with requiring that employees record their hours worked for billing purposes, however. It also is proper for an employer to require exempt employees to specify times when they are in the office so an employer knows their whereabouts.

An employer can require exempt employees to work eight hours per day. However, employees can't be "docked" if they don't work the minimum amount of time. The employer can only fire these employees or put them on an hourly basis.

If employers do not treat an exempt worker as they should, that exempt status will be lost. Once that status changes from exempt to nonexempt, the employee will qualify for a host of additional protections, including overtime compensation.

3. There is nothing illegal about an employer requiring exempt workers to work two Saturdays per month. There is no doubt that employers can take advantage of exempt workers. The solution for workers is to quit, which will ultimately harm the employer.

4. Employees must be reimbursed for their expenses related to work.

--Don D. Sessions, Employee rights attorney, Mission Viejo

Fighting for Vesting Before Layoff

Q: My date to become vested in the company pension plan is Jan. 16, 1997. But now I have received a layoff notice. My final work day, with the severance package, is Jan. 7. Is there any way I could get the company to grant me my retirement benefits?--V.C., Inglewood

A: There may well be. No employer has an obligation to let someone be employed long enough to become eligible for pension benefits. However, under federal pension law, no employer can terminate an employee for the purpose of depriving him of vesting.

--Michael A. Hood, Employment law attorney, Paul, Hastings, Janofsky & Walker

COBRA Laws Not for Small Firms

Q: I was laid off a few months ago by an engineering company (with less than 20 employees) where I worked for over 4 1/2 years. When the company terminated my employment, it terminated my health insurance as well, without giving me an option of continuing insurance coverage under COBRA laws. Has the company violated any law and, if yes, to whom could I report it?

--S.G., Santa Ana

A: Your employer is not subject to COBRA rules requiring continuation of health insurance if it had fewer than 20 employees for at least half of its working days during the prior calendar year. If that is true, then you are not entitled to elect COBRA coverage.

On the other hand, if your employer had 20 or more employees on at least 50% of its working days last year, you may he entitled to elect COBRA coverage. In such a case, your first step should be to contact your former employer to ask why it did not offer COBRA coverage to you. If you are not satisfied with the response, you could contact the U.S. Department of Labor office in Pasadena for assistance.

--Kirk F. Maldonado, Employee benefits attorney, Riordan & McKinzie

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