California Court Clarifies Sick Leave Calculations for Outside Sales Employees

An Atkinson, Andelson blog explains that a recent California Court of Appeals decision clarified how paid sick leave calculations for outside sales employees.

In Hirdman v. Charter Communications, LLC, the court held that such employees qualify as “exempt employees” under California’s law, meaning employers may calculate their sick pay in the same manner as other exempt forms of paid leave.

The ruling offers essential guidance to employers navigating compliance with sick leave obligations in the absence of explicit statutory definitions.

The case arose when a former outside salesperson alleged that Charter Communications miscalculated his paid sick leave by excluding commissions.

He argued that while outside salespeople are exempt from overtime, the paid sick leave statute does not expressly categorize them as exempt; therefore, they should be treated as nonexempt for purposes of sick leave.

This would have required sick leave calculations based on total earnings, potentially resulting in increased compensation for time taken off due to illness.

Defendant Charter maintained that the exempt status under the sick leave law extends to outside sales employees, and thus, calculating leave pay at the base rate, without commissions, was consistent with lawful practice.

The appellate court affirmed the trial court’s ruling in Charter’s favor. It ruled that the meaning of “exempt employees” may be understood through its use in wage and hour law.

The court also observed that when the Legislature intended to restrict exemptions to only administrative, executive, or professional categories, it did so expressly in other statutory provisions, which was not the case here.

Employers should review and update policies to reflect this standard, ensuring that calculations for exempt and nonexempt employees remain consistent with statutory language and judicial interpretation.

According to the blog, “There is no legal requirement to include commissions or use the ‘regular rate of pay’ method reserved for nonexempt employees.”