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Jun29

Compensation

Compensation
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Our company did an across the board salary reduction for exempt employees. Is it legal to accrue for the loss of wages (to be paid at a later date) for someone who has a guarantee of wages in their employment contract?

You need to consult an attorney about this particular employment contract. We cannot begin to make a determination without even reading the agreement — and we do not give legal advice.

Two issues that occur to us are: It may not be legal to reduce the wages at all, and, deferring an exempt employees wages to a future date may be illegal. State law, as well as federal law is an issue here.

Normally an employer can reduce an exempt employees salary as long as the reduction is permanent. Federal law defines permanent in this case as lasting 3 months or more. But because there is a contract in place, you may very well have a choice between terminating this employee and paying his or her full salary under the contract.

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This entry was posted on Monday, June 29th, 2009 at 6:31 am and is filed under
Compensation.
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