Budget cuts- Exempt employees
kmontney
3 Posts
Our company is considering having everyone (exempt and non-exempt) employees go to a 32 hour work week. Does the company have to pay the exempt employees thier weekly salary or can we legally deduct the 8 hours pay from the salaried employees?
Comments
You can reduce their wages proportionately to the reduction in hours. Instead of paying them $1,000 per week you can pay them $800.
The $800 would be payable whether they worked the full 32-hours or not - just like before.
I wouldn't call it a reduction in weekly pay. Readjust your records.
The only time you can deduct from pay for a partial workweek is under FMLA conditions....so you can not DEDUCT for a day that the company chooses to close, but must pay them "full wages" for any week in which they work. If the company were to close for a full workweek, you would not have to pay exempts.
What you can do is change/reduce their salaries. It is best to do so only for future earnings. Each exempt employee would still have to make the minimum of $455 per week -- this amount can not be prorated.
That said, I wouldn't phrase/communicate it as a direct proration to hours worked. This ties too closely to paying as an hourly employee. I also would not tie it directly to 32 hours....but rather 4 days. Because I suspect your exempt employees don't work exactly 40 hours a week right now any way.
Don't forget if you are lowering wages/salaries as an overall cost reduction (whether is't a reduced workweek etc) you must give the employees one week notice prior to the reduction.
You can reduce their wages proportionately to the reduction in hours. Instead of paying them $1,000 per week you can pay them $800.
The $800 would be payable whether they worked the full 32-hours or not - just like before.
I wouldn't call it a reduction in weekly pay. Readjust your records.
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This is actually dangerous. It has the same issues as simply reducing salary pay because a salary person goes part time. It always has to be clear that you are reducing pay due to reduced duties. When you reduce salary pay for working less scheduled time, the salaried individual can make the claim that you never had an intention to pay them on a salary basis in the first place as it is now obvious that you were really paying them on a time basis.
Be very clear that the reduction in pay is reduced to a reduced expectation or don't reduce pay in my opinion. Salary basis challenges are nasty and the back over time pay penalty will cover 2 years of employee claims for which you are unlikely to have any time records.