Exempt employee pay reduction

sssteel

We have an exempt employee who is not performing at an acceptable level. He is a salesmen and he is not earning his pay. He has been with the company for two years and has been counseled on his performance in the past. Our owner is not ready to terminate the employee, but he is asking me if he can reduce his pay. My understanding is that we can't single out an exempt employee. If we decide to take this step we would have to reduce the salaries of our entire sales team. This is something we do not want to do. I have suggested that if the employee is performing at an unacceptable level we need to terminate him, but as I said before our owner does not want to do this. If any of you have been in a similar situation, or have any nuggets of truth that I can use, I would be very grateful for any advice you could share.

KSR6450

Is that a state regulation? I know you cannot reduce their salary below a certain amount (tied to minimum wage) or else they will lose their exempt status; but I hadn't heard of the requirement to cut everyone's pay. New one for me

NaeNae55

You are talking about a permanent reduction, right? And it is not tied to his hours?

I think you can cut his pay on that basis. You give employees raises based upon work quality, so why can't you reduce someone's pay on the same basis? It is standard business practice to pay employees on a number of factors. They include qualifications, market rates, how difficult the job is to fill, and how well they do the job. If an employee is not performing as well as others in his class, he should not be making as much money. Of course, after 2 years it seems to me it is unlikely he will ever fulfill his promise, but if your choices are keep him at status quo or reduce his pay, I would go with reduce his pay. Just make sure he meets the minimum pay required to remain exempt.

Good luck!

Nae

joannie

I agree with my two esteemed colleagues. Unless the salesman has a contract...........?