FLSA- Reduced Hours- salaried Employees

tom · August 2001

Due to continued sagging sales, we were forced to place our hourly workforce on 3 and/or 4 day workweeks for an indefinite time period.
Now management has asked whether it would be legal to place our salaried staff under the same schedule or are salaried employees entitled to a full week's pay if they work any portion of the workweek?
Thanks
Tom

Down_the_Middle · August 2001

You are assuming that a full week's pay for exempt staff is 40+ hrs/week. That may not be the case. I have a number of parttime exempt staff, who are salaried and who work based on an avg of 20, or 25 hrs per week. You can certainly do this with your FT'ers who may not need to work 40 hrs per week. While most people tend to think of exempt as FT-only, as long as this position satisfies the FSLA exemption definition, you can have someone paid a salary (above the weekly minimum threshhold) and work less than the customary 40/week.

Rockie · August 2001

So, what do you do in a case like this...since you don't count hours for exempt people, do you just come up with a salary agreement based on the hours they agree to work for a specific annual salary?

Down_the_Middle · August 2001

Yes. If someone earns $50K as a FT exempt and wants to reduce to PT (say 25 hrs/wk), I'd develop an agreement paying the person $31.2-31.3K and expect them to average 25 hrs per week. Some weeks may be less, some more, but the pay remains the same. They remain salaried, exempt and simply spend less time on the job.

dhnyct · August 2001

To get away from the "hourly" terminology, could the agreement be based on percentages? The job is reduced by a determined percentage and, likewise, the salary.

Down_the_Middle · August 2001

I don't know why percentages wouldn't work........ Wage & Hour has reviewed my example a number of times and found it to be acceptable. They've never squabbled with how the salary is determined----only that it is consistently paid per week.

Susan Fentin MA · August 2001

You are on the right track here. You can agree to reduce the hours of work of your salaried employees and reduce their salary accordingly. Take care, however, not to try to cram 40 hours of work into a 4 day work week or you might be accused of trying to get around wage and hour laws. Good luck

tom · August 2001

Isn't also true that any reduction must be for other than temporary duration?
For example, you cannot reduce the hours just due to a decline in orders- we have reduced workweeks for our hourly- we cannot reduce the salaried staff accordingly, can we? I believe we are obligated to pay full salary to those salaried employees as long as they work any portion of the week.
Any comments?
Thanks- Tom

dhnyct · August 2001

That might depend on the definition of "temporary". Payroll administration could become a nightmare, and staff morale could hit rock bottom unless reasons and consequences were clearly understood.

It might be expected in businesses strongly affected by seasonal factors. What about construction businesses, for instance, who can't work when conditions are too wet/dry, too warm/cold, etc???

Down_the_Middle · August 2001

Changes can be made on a PER PAY PERIOD basis, altho it is far too tedious to do it this way. Certainly, if downturns are expected for a few months, this can be a short-term solution.

Marie · August 2001

When I had to deal with DOL over changing pay amounts, I was told that I couldn't change the salary every pay period. I could change it; however, it had to be within a "reasonable" period. It was suggested that quarterly might be considered "reasonable."

dwf · August 2001

We've successfully been using flexible work arrangements (FWA) for exempt employees for years. The typical FWA incorporates a business case and worksheets and is renegotiated every 12 months. Since exempt employees' worked hours are expected to be greater than 2080 in a 12-month period, the FWA formula is based on a number greater than 2080 and compensation is adjusted accordingly. Since we have busy seasons, a FWA could go up or down during the year but the targeted total hours for the 12 months wouldn't change. The FWA also takes into consideration vacation and holidays. At the end of the 12 months, a true-up may take place if the actual hours worked were +/- the target. Under hours is rare since the arrangement is monitored quarterly. You may want to consider something like this for your situation.

FLSA- Reduced Hours- salaried Employees

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