Pay for Exempt & Non- Exempt Employees During Company CLosing
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Please read and give your beads of wisdom on the following topic.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Our Company is planning to close on the Friday after Christmas (which is not normally a paid leave day at my company), New Years eve and the Friday after the New Year (also not normally a paid leave day at my company).
These closing on these normal workdays can be attributed to the waning economy which has caused sluggish returns on our investments, and affected our disposable income. Thus the thinking is to have people use their leave or apply for unpaid leave.
Exempt Employees
What about salaried employees who do not have leave available. Remember, these are FULL, not partial day closings? Let's assume the exempt employee had no leave to cover the days that the Company closed. Don't we have an obligation to pay them anyway for the work performed during the rest of the week?
Consider that 29 CFR § 541.602 states that "an exempt employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked. Exempt employees need not be paid for any workweek in which they perform no work. An employee is not paid on a salary basis if deductions from the employee's predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. If the employee is ready, willing and able to work, deductions may not be made for time when work is not available."
Non-Exempt Employees
Is there a similar stipulation to pay non exempt workers if they would otherwise been available to work, if not for the Company imposed closing?
Comments
If your exempt employees have worked at all during either of those weeks and have no leave time available, you will still have to pay them. If your non-exempts don't have leave time then they will not get paid.
Your exempts would need to be paid for both weeks in full...regardless of what "bucket" of money it comes from. The employer has the right to deduct vacation/sick balance for that time but if the vacation/sick balance is zero, it must still be paid.
Now, there is a possibility (depending on your state and on your company policy) that you could take the employees vacation/sick balance into the negative -- that is take those days from the next time the employee accrues a vacation/sick balance. But I don't suggest this as a best business practice. And there are some questions as to whether an employee's negative balance could affect their final paycheck should they quit. In all honesty, this method just stalls the issue rather than solving it, but I know companies that do it this way.
Our company is facing the same problems that everyone else is. Currently the suggestion is to ask everyone to take every other Friday off and require them to take vacation. If they don't have vacation time, they can borrow it. From what I'm reading, this isn't legal. If we can't do this then they are going to give a 10% across the board salary cut to every employee.
Can anyone direct me to written documentation that it is or is not legal to make employees take vacation time or borrow time to make up their weekly salary?
Thanks.
Vacation is a state-by-state and circuit by circuit issue. In some places (e.g. 9th Circuit), it's earned compensation and, although you don't have to pay it out every pay day as it accrues, you have to give it to the employee when they leave. In Texas (5th cuircuit), vacation is whatever you say it is in your written policy on vacation. Therefore, what it means to actually implement your plan means different things in the event of a negative vacation balance upon employee separation.
In general, you can force people to use vacation time. In general, you can allow a vacation bank to go negative but you cannot collect on the negative balance in the event of an employee separation, particularly if the negative balance was forced on the employee. Perhaps under some sort of payroll loan as vacation scheme you could in some places get something back. I'm willing to learn that there are exceptions to this, but I think this one is pretty safe.