Suspensions-With or Without Pay?? A New Concern!

In the past, employers had an option regarding compensation for suspended employees–pay or unpaid. Most suspensions are for disciplinary reasons and are normally one, two, or three days, and are unpaid. Suspensions that are handed out pending some type of investigation can be paid, or unpaid, and are usually unpaid.  It’s really at the option of the employer–until now!

Apparently the California Division of Labor Standards Enforcement (Labor Board) treats the unpaid suspension like a layoff if an employee is suspended without pay and not given a definite return-to-work date within the same pay period. Their logic is that the employee is legally determined to have been terminated as of the date of the  suspension. As many of you may recall we have constantly preached to limit the number of days for any suspension. The EDD also considers extended suspensions (usually two weeks) as a termination.

According to the Labor Board a suspended employee must be paid all earned wages and benefits (meaning vacation or PTO that has not been used) on the last day that the employee performed services prior to the suspension. The whole issue appears to be whether or not the suspension takes place within the “current” payroll period. With this in mind, if you have to suspend an employee because of an investigation, give the individual a “return-to-work” date within the same pay period. If there is only a day or two left in the pay period merely suspend the person the day after the new pay period begins (if it’s only a day or two away) and be sure to give the return-to-work date (try to keep that date within three days).

If you do not follow the above very closely and the employee files a claim with the Labor Board, the suspension will be deemed to be a termination and any failure to pay all monies owed could subject you to waiting time penalties ( a day’s wage will be owed to a maximum of 30 days).

If you are confronted with the possibility of having to suspend an employee please call and speak with me directly.