Shutdown, exempts, and volunteering for unpaid days off
Christine M
66 Posts
We are planning a shutdown from 12/24 through 1/1/03. Employees receive 12/24, 12/25, and 1/1 as paid holidays during that shutdown. As this was an unplanned shutdown, many employees have not retained sufficient vacation time to cover the time off. I have told exempt employees that they may either use accrued 2002 vacation or borrow from 2003 vacation. Non-exempts have those options but may also choose to go unpaid.
[ol][li]Several of my exempt employees have indicated that they do not want to borrow from their 2003 accrual, and want to take the time unpaid. The problems as I see it are:
[ul][li]Cannot not pay them for a full week as they will never be out for a full calendar week (and within each week, will be paid for a holiday);
[li]Although I am aware that we can deduct pay from exempt individuals if it is for personal reasons and it is in full-day increments, I think that only applies if work is available and in this case, it is not.
What do you think?[/ul]
[li]Now a strange question...I have always classed employees as exempt and non-exempt. Here they are classed as hourly non-exempt, salaried non-exempt and salaried exempt. Salaried non-exempts have the same benefits as the salaried exempt, but they are eligible for overtime for hours worked over 40. Would you recommend grouping them with the hourly workforce or the exempt workforce as far as their shutdown options are concerned? Legally, they could be unpaid, but the "salaried" classification seems to cloud the issue.
[ol][li]Several of my exempt employees have indicated that they do not want to borrow from their 2003 accrual, and want to take the time unpaid. The problems as I see it are:
[ul][li]Cannot not pay them for a full week as they will never be out for a full calendar week (and within each week, will be paid for a holiday);
[li]Although I am aware that we can deduct pay from exempt individuals if it is for personal reasons and it is in full-day increments, I think that only applies if work is available and in this case, it is not.
What do you think?[/ul]
[li]Now a strange question...I have always classed employees as exempt and non-exempt. Here they are classed as hourly non-exempt, salaried non-exempt and salaried exempt. Salaried non-exempts have the same benefits as the salaried exempt, but they are eligible for overtime for hours worked over 40. Would you recommend grouping them with the hourly workforce or the exempt workforce as far as their shutdown options are concerned? Legally, they could be unpaid, but the "salaried" classification seems to cloud the issue.
Comments
We announced this early enough in the year so that individuals would have an opportunity to build up enough PTO time to cover this.
In regards to question 2 -- if they are non-exempt, they are non-exempt. That status (NE) is determined by the job they do, not by how they are paid (by salary). They are required to receive overtime over 40 hours worked. You should consider them as your other non-exempts as to how you treat them with regards to this shutdown.
Thus, if the non-exempt employee is paid a weekly salary, he or see would be paid for the forty hours plus any overtime hours properly computed under FSLA regulations.
The concept of salary does NOT permit docking pay for absences. The only reason that exempts get docked pay for absences is that FLSA allows it to occur for them in specific situations. Otherwise, the entire salary would have to be paid for the week.
Now, if the company wants to play games and tell the non-exempt, salaried employees that they are salaried except when it is not beneficial to the company, then I guess you can do that. But then you may very well have an FLSA issue on your hands, because you would probably be considered treating them as hourly.
There is a difference under FLSA regulations on how you calculate overtime to hourly non-exempts and how you calculate overtime to salaried, non-exempts.
See 29CFR778.110 (Payment of overtime for hourly, non-exempts) at [url]http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=29&PART=778&SECTION=110&YEAR=1998&TYPE=TEXT[/url]
AND
29CFR778.113 (Payment of overtime for salared, non-exempts) at [url]http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=29&PART=778&SECTION=113&YEAR=1998&TYPE=TEXT[/url]
Resoution of the issue in the first quesiton is more complex and may not be beneficial to the company.
Generally, if the employer chooses to close down for a day or more during the week, those absences are not to be docked from the employee's pay. Since the employee will be at work at least one day during each of the two weeks and the other days' absences result from the company's closure for the balance of the two weeks, then the exempt employees would have to be paid their full weeks salaires. See the FLSA exemption regulations regarding the payment and docking of salary at 29CFR541.118
US DOL has taken a general position that permits an employer to deduct accrued time balances from an exempt employee's "bank" without affecting the exempt status.
Theoretically, the company could dock the existing or forthcoming accrued time balances to cover those shutdown days without affecting the exempt status. At least, that is what I have seen in writing as DOL's position (some courts disagree). However, if you do that against an employee's desire, you will of course have morale issues.
It may just be easier to have the exempts take off the full two weeks Monday through Friday rather than working one day in each week. In that way, no salary would have to be paid because the exempt employee did not work in any part of either week. You could of course still pay the holiday pay.
Being able to take the time unpaid is seen as a benefit to EMPLOYEES, because it is solely at their choice and my exempts do not have the choice; they must use leave bank time to cover the days off. It is not beneficial to the company because employees will still maintain leave that may be used later when it is less convenient. In our company the best classification to be in is Salaried non-exempt. They get overtime when they work it and they are entitled to slightly better benefits package that the exempts receive. In addition, they receive merit-based pay, rather than time-in-grade.
I don't think it is an FLSA issue because non-exempts will not work overtime in a week when they are voluntarily taking an unpaid day, and we do pay them, whether hourly or salaried, time and a half for hours over 40.
Unfortunately, to meet production needs, two full weeks off is not an option. After reading your posts, it appears we agree that exempt employees must be paid. I have been here a little over one year and have already told managers that salaried employees may not take time off with pay during the shutdown. In the past during a shutdown period, exempt employees were under the impression they could allowed to take unpaid time, and as you know, the appearance of taking away anything always causes grief and aggravation.
Hatchetman, I do see what you mean about the holiday pay, FLSA refers to hours worked, not hours compensated. Thanks for that clarification.