Tuesday, March 17, 2009

Do you know? Mandatory unpaid time off may affect salaried employees’ exemptions

Do you know? Many companies are turning to mandatory work furloughs or reduced work schedules as creative ways to save wages without having to lay off employees. These programs are designed to control the number of hours worked by employees and the resulting amount of wages paid. When applied to salaried exempt employees, however, in increments of other than a full week, furloughs and reduced work schedules can jeopardize exemptions under the Fair Labor Standards Act.

The FLSA provides an exemption from the minimum wage and overtime requirements for any employee employed in a bona fide executive, administrative or professional capacity. To qualify as exempt, most executive, administrative, and professional employees must, among other factors, be paid on a salary basis. Generally, an exempt employee must receive his or her full salary for any week in which the employee performs any work, without regard to the number of days or hours worked. In no event can an employer take any deductions from an exempt employee’s salary for full or partial day absences occasioned by lack of work. Thus, if an employer schedules an exempt employee for less than 40 hours in a week, the employee must still be paid a full week’s salary, or risk placing the employee’s exemption in jeopardy.

Reduced work schedules and furloughs, while very much in vogue, raise a host of complex legal issues. This post only discusses one such issue. If your business is considering implementing such an idea, contact your employment counsel to ensure that your plan complies with all wage and hour, discrimination, and other labor and employment laws.

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.