Exempts Mandatory Day Off

pmaher · January 2003

In order to reduce expenses during the first quarter, we have been asked for ways to cut costs (or generate revenue). We have suggested to management that during the next 2 months, exempts take ONE day off from work without pay. This would be mandatory.

Does anyone see any problem with this?

Don D · January 2003

I would if I were one of your exempts. You might also run into problems with the FLSA regs on paying a guaranteed salary for all hours worked in a work week, whether many or few.

RT2 · February 2003

There is a specific exemption for public agencies and furloughs, if that designation fits you. See 20 CFR 541.d(b): "Deductions from the pay of an employee in a public agency for absences due to a budget-required furlough shall not disqualify the employee from being paid "on a salary basis" except in the workweek in which the furlough occurs and for which the employee's pay is accordingly reduced."

Hatchetman · February 2003

RT2, I didn't take it that PMaher works for a governmental agency. 541.5d isn't applicable to private sector.

This section, does however, clearly indicate that any furloughed days during an exempt employee's work schedule may result in the loss of that's days salary wihout affecting the exempt status (thus "willing, ready and able to work" would to that degree be modified. Since "5d" is about 10 years old, I doubt that there has much interpretation or litigation on it.

Rockie · January 2003

Yep, there is a problem. If exempt individuals work any part of a work week, they must be paid for the entire week. Otherwise they lose their exempt status and become an hourly employee.

Hatchetman · January 2003

An exempt employee who works any part of the week is entitled to be paid for a full salary for the week unless a full day's absence occurs for personal reasons or for illness or injury that is compensable under the employer's paid sick leave plan, policy or practice.

On those occasions where because of economy or other business based decisions, the employer shuts down for part of the week, such as for a day or two, and the emplyee was ready, willing and able to work on those days, then the exempt employee still has to be paid.

So, if you shutdown the company for a day and the exempt employee would have worked that day, then you would have to pay the employee's salary for the week WITHOUT docking that day's pay.

Take a look at the Code of Federal Regulations, 29CFR541.118a at
[url]http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=29&PART=541&SECTION=118&YEAR=1998&TYPE=TEXT[/url]

While there may be no immediate savings of the exempt emplyee's salary if you close down for a day, there could be a longer term savings as follows.
Under DOL interpretation, you may dock the exempt emplyees accrued time benefit since that's a fringe benefit and not a salary. So, if the exempt employee has accrued time on the books, you could dock the equivalent time of the work shift of the exempt employee. However, you would still have to pay the salary EVEN IF the exempt employee did not have any available accrued time on the books.

In particular regard to docking accrued time, however, there are two considerations. Firstly, check your state's laws regarding vacation time and PTO. If there is a prohibition against "use it or lose it" policies or the state law requires pay out of accrued vacation or PTO time at point of termination, then you probably won't be able to dock PTO or vacation time of the exempt employee. Secondly, you may have morale problems if some exempt employees get docked time because they have been coming to work while other employees still get their salary because they have already exhausted their accrued time on the books.

pmaher · February 2003

Thanks. I was thinking along the same lines. Guess I was just hoping we had some alternative. Guess not.

xsafford · February 2003

There is a way to do this. Identify certain days which will be unpaid days off for exempt employees (and presumably all others as well). A good example would be a summer or Christmas week shutdown. Determine what percent of total annual work days the shutdown days represent. Reduce the salaries of exempt employees by that percentage. Our attorney advises that this passes legal muster.

Hatchetman · February 2003

XSafford, what it sounds as if a company would be really doing is reducing the salary using the actual work days during the year. Thus it is not necessarily setting the salary on the basis of difficulty of the job and market demands but also on the basis of days worked, prior to docking salary for permissible reasons in 541.118(a).

It would seem to bode well for and be consistent with the concept tha DOL maintains that an exempt who does work extra days or even extra hours could be paid "overtime" or additonal compensation beyond the salary without jeopardizing the exempt status.

Even so, I'm not comfortable with the concept your attorney is suggesting so I would want to make sure with a DOL Opinion letter.

It is an interesting idea.

Pork · February 2003

Pmaher: It reads as if you have already suggested this course of action! The only savings you would save is the "one day of expense" to support the salaried employee, including the perks and operating cost of the perks. It sounds like your company ought to be considering going to "10 hour work days and only 4 days a week for management". You might even find the exempt employee would really like that and the labor employee would also be able to get 32 to 40 hours a week, if the work is there to be done. Pork

Exempts Mandatory Day Off

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