Exempt Employees Working a Reduced Schedule

HRMatters

Can you reduce the pay for an exempt employee who has voluntered to work a reduced schedule for personal reasons? Should the employee be changed to hourly? If so, does that affect other exempt employees in that job classification?

NaeNae55

We have had exempt employees who work part-time. We just re-rated the job for the reduced hours. However, recently there have been times when it got kind of sticky. If I were you, I would pay by the hour.

Good luck!

HRMatters

Thanks. That's exactly what we're doing. However, it concerns me if the work is the same for the full time "exempt" employees in the job classification. Does that open us up to FLSA violations?

Shadowfax

I'm a new user and I think I lost the first responsive post. I think you can do what you have suggested. 541.118(a)(2)permits deductions for absences greater than a day for personal reasons. I had a situation where employer wanted exempts to take some time off and not use vacation. Offered some incentive as bait. I concluded in that instance the time off had to be for a least a full week, since real reason the time was off was lack of work (118(a)(1).

Hatchetman

[font size="1" color="#FF0000"]LAST EDITED ON 06-19-03 AT 04:02PM (CST)[/font][p]To the extent the exempt employee is reducing the schedule by full day increments for personal reasons, you may dock the salary for that reason.

To the extent that the exempt employee is reducing the schedule by part day increments, you may not dock the salary for that reason. But, depending on what state you are in, you may be able to charge accrued time balances for the hours missed from the expected daily work schedule (but still pay the full salary).

If the latter situation and the reduction in work schedule is long term or permanent, then you may seriously want to consider reducing the salary accordingly. The employee is basically going from full time to part-time. FLSA under DOL Opinion does permit a pro-rated reduction in the salary based upon the percentage in reduction of hours actually worked in comparison to what the exempt employee is anticipated to work with the full salary: if a $900 weekly salary is expected to cover 45 hours of work during the week and the emplyee has reduced the hours to 35 a week, then the weekly salary may be reduced accordingly to 7/9's or $700. Also, check any resulting salary as part of the exemption test.

In addition, check your State's wage and hour law requirements. In California (where else?), such a permanent reduction, as I understand the State's Labor Commissioner's Opinion, would be a violation of FLSA reguations Section 541.118(a)'s provision that "under...[the] employment agreement [the employee] regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of his compensation, which amount is NOT subject to reduction because of variations in the quality or quantity of the work performed [emphasis added]."

And don't pay hourly to the exempt. You may jeopardize the exempt status of other employees who do the same work.