Rhea v. General Atomics, 227 Cal. App. 4th 1560 (2014)

Lori Rhea is an exempt employee of General Atomics who receives a salary and accrues comprehensive annual leave (“Annual Leave”) that can be used by employees to take paid time off for any reason, including vacation, sickness, medical appointments, family obligations and leisure pursuits.  The amount of Annual Leave that accrues depends on the employee’s length of service and ranges from 15 to 32 days per year.  General Atomics’ policy has been to deduct from Annual Leave for partial-day absences of any length – though an employee who is absent for a full or partial day is not required to use Annual Leave if during the same week the employee works a total of 40 hours.  Rhea filed this putative class action on behalf of herself and other exempt employees who were subject to Annual Leave deductions for partial-day absences of less than four hours.  The trial court granted General Atomics’ summary judgment motion on the ground that California law does not prohibit requiring exempt employees to use Annual Leave for partial-day absences of any length.  The Court of Appeal affirmed, holding that the policy did not create an illegal forfeiture and that prior case law does not limit such deductions to instances in which the partial-day absence is at least four hours in duration.