Salary Cuts?
rroberts
34 Posts
Can the employer cut back salaries for exempt employees as a "cost saving measure" because sales are slow. And if so, are there rules to follow as to who and how much?
Comments
We did all exempts 10% across the board. It lasted approx. 2mths. then they were returned to their old rate.
Everyone understood why although we could not tell them how long it was going to last.
Caveats:
1. Ensure that the new wages continue to satisfy the FLSA minimum for exemptions.
2. Make it accross the board for everyone in similarly situated positions as a defensive move in case you are challenged for discrimination.
3. Record everything related to the move for recordkeeping purposes--the reasons why, what was done, the duration if known, expected outcome--and document how the decision is related to your business.
4. Communicate it well or as well as possible to your staff. Though this is a negative step, there is a way to get buy in, and buy in is important if you want your staff to help your company weather the storm. The last thing you really want is a mass exodus from disgruntled workers who feel like they aren't being treated fairly or are being penalized for something over which they may have no control.
Let us know how it turns out. What you are thinking of is part of a retrenching strategy that many of us may be required to face from time to time. Because it is retrenching, your workers will also be interested to know what else your company is doing to help remediate whatever the circumstances are that are driving the decision.
Best wishes.