Employer-Provided Meals or Lodging Cannot Be Used as Credit

According to the California Court of Appeal (First Appellate District), monetary payments alone determine whether the mandated minimum salary rate for exempt status has been met.

Opinion

In determining exempt status, monetary payments alone determine whether the mandated minimum salary has been met under state law. The court noted that California follows the federal free and clear rule. In determining whether the salary rate for exempt employees is satisfied under the "free and clear" rule, the value of any payments in kind, or other forms of remuneration (e.g., employer-provided meals or lodging), cannot be used as a credit against the required minimum salary.

Thus, the costs incurred by an employer to provide an employee with board, lodging, or other facilities may not count towards the minimum salary amount required for exemption.

Note: For exempt status (from state overtime requirements) under California law, an employee must (among other things) receive a monthly salary equivalent to no less than two times the state minimum wage for full-time employment of 40 hours per week. When both the federal Fair Labor Standards Act and a state law apply, the employee is entitled to the most favorable provisions of each law.

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