On November 23, 2009, the Division of Labor Standards Enforcement (“DLSE”) issued an Opinion Letter stating that California employers may deduct from the leave balances of exempt employees for partial day absences, including absences of less than four hours. Of course, employers must not deduct from the wages of an exempt employee for any partial day absences. The letter marches through a number of possible scenarios, and may be worth reading if you have a specific question. One interesting point involves the drafting of employee handbooks. Employers should make clear that vacation time will be deducted on a mandatory basis once sick leave is exhausted. I doubt most employers have have such langauge in their policy documents.