reduction in hours

We are a company of 40 employees in NY.  I was just approached by management that they need to cut payroll drastically and want to drop to a 4 day workweek and possibly cut more staff to 20-30 hours a week.  We have cut pay across the board by 20% this payroll and given everyone Fridays off for now but we need to do more still.  They would like to maintain our skilled staff but we cannot afford to keep them fulltime.  I know exempt employees need to be paid their straight salary so the only thing I can come up with for them is a full week furlough once a month for the next three months to reduce them.  My non-exempts will be dropped to 3 days a week (but at a reduced rate) so they can maintain health insurance.  

I am not attorney and cannot afford to call my labor attorney- can someone throw out ideas of what i should pay attention for, to avoid legal troubles.

Also, I have one executive out on disability.  He is being paid some vacation hours each week to supplement the std policy.  I can reduce his pay the 20% since everyone else recevied that same reduction, correct?

Any advice or further ideas to reduce rather then layoff would be helpful. 



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  • Unless you have a contract to the contrary, your full time exempt employees can simply take a pay cut as long as you don't go below the salary minimum (something like $455/wk).  If you have employees who may have relied on your job offer to take some risk, such as quitting another job to accept your offer or selling their home to move near your location, there may be risks associated with changing the deal now and only a local attorney would be qualified to discuss those risks (or non-risks) with you.  Assuming you have non of those challenges, dropping pay across the board on exempt employees prevents you from having to offer a full week off to satisfy the salary basis test.  I imagine people with a forced week off will use it to find other work, which will sink your ship faster.

    When you say you must reduce payroll by 20%, consider that 20% of your payroll comes from potentially less than 20% of your employees.  If you can make larger cuts from highly paid or over-paid but replaceable people, consider cutting more of the fat from that group before getting into Joe Lunchbox's check.

    Consider cutting heads in a layoff to protect pay and employment prospects for the others.

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