Human Resource Blog

Exempt employee hours and pay

Hello,

I have an exempt employee returning from leave who has requested to work 32 hours per week. Because their exempt status will not change, can we reduce the salary to reflect the change in schedule?

Thank you!

That will depend on why the person is requesting the change in schedule. If the employee has a permanent disability, and is requesting an accommodation under the ADA (the Americans with Disabilities Act) then you can legitimately prorate the exempt employees salary based on the number of hours worked. This would be true, even if the number of hours worked each week varied. Note that this is permissible only because you are granting this accommodation under ADA.

If the employee will be using intermittent FMLA to work 32 hours per week instead of 40 for a limited period of time, then you can also reduce the employees salary. That is because FMLA is unpaid leave — even for exempt employees. So the employee would be entitled to 4/5 of her weekly salary if she worked 32 hours per week instead of 40 under FMLA.

However, if neither FMLA nor ADA applies, you may want to be cautious about giving this employee a schedule of 32 hours per week. That could prove problematic, and there is no law that you must give this employee part-time work. The problem arises if there are other employees in the same job, who work full time. Suppose Jane is an exempt claims adjuster who is paid 80% of the salary that other exempt claims adjusters earn. That certainly creates the appearance of discrimination in pay — an especially sensitive topic under the Ledbetter Act. Nor can you pay Jane more in any week when she works more than 32 hours. If you do so, the Department of Labor would likely rule that none of the claims adjusters were ever exempt and they are all entitled to overtime pay for the past 3 years.

This could also be a morale problem for other exempt  employees. They will see Jane coming and going as she pleases, working fewer hours than other exempt employees. They will not be privy to the financial details of her arrangement, and it may produce a great deal of resentment. In the worst possible case, other exempt employees will decide that they can work 32 hours per week, without any reduction in pay.

If this employee is valuable and you want to keep her — even on a reduced schedule — the best bet would be to pay her on an hourly basis. That is the fairest solution, for both the employee and the employer. Alternatively, you could create a new exempt postion of Part-time Claims Adjuster, with a weekly salary that is 80% of the full-time claim adjusters salary. Just document the reason for the change and be prepared to defend it in court if necessary.