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Jan20

Exempt Employees Working During Temporary Shut Down?

We’re a small manufacturing company and orders are starting to slow. We’re considering closing on Fridays for a month or two to save money. I know that exempt employees have to get paid their full salary if they work at all during a week. So, if we have to pay them regardless, is it okay to ask them to work on Fridays while the hourly employees are off during the shutdown?

You’re correct in that employees classified as exempt under the federal Fair Labor Standards Act (FLSA) must receive their full predetermined salary for any workweek during which work is performed with limited exceptions.

Furthermore, deductions from an exempt employee’s salary for absences occasioned by the employer generally violate the salary basis test for exempt status. An employer closing the business for one day would be an absence “occasioned by the employer.” Also, an exempt employee’s salary cannot be reduced if the employee is ready, willing, and able to work, but work was not available such as the company being closed for one day.

It’s worth noting that if an exempt employee is furloughed for a full week at a time, there is no requirement to pay the employee’s full salary for the week. Also, if you were considering closing on Fridays for an extended period of time, say 6 months or so, it’s possible to revise an exempt employee’s salary accordingly as long as he still otherwise meets the criteria for exemption.

The FLSA doesn’t prohibit an employer from furloughing non-exempt employees only. In fact, it’s often recommended to furlough or lay off employees based on objective employment criteria to minimize the risk of discrimination claims. Commonly used objective criteria include length of employment, employees in a particular department or on a specific project, and contractors or part-time employees.

Keep in mind that they’re may be some negative feelings from the non-exempt staff. Most employees don’t understand compensation law specifically as it relates to exempt employees. They may simply see the situation as they’re not allowed to work while their managers can. So, it’s best to explain the reasoning to the extent feasible to avoid the perception of unfair treatment. Moreover, furloughed employees are often anxious about how the missed day of work will affect their pay and benefits. Have any necessary information readily available to help ease their anxiety.

Lastly, remember to ensure furloughs are conducted with regards to any applicable employment contracts or collective bargaining agreements.

This entry was posted on Wednesday, January 20th, 2016 at 2:08 pm and is filed under
Compensation, Labor Laws.
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