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Dec01

Salary Laws

I was recently consulting with a company on a non-related issue, and discovered an HR policy that stated since the organization had switched to a 36 hour week (for employee satisfaction and turn over reduction) the employees would still be paid forty hours for working 36. Has anyone else ever seen that, and is it legal to do so?

Reducing employees’ hours is a common way to cut expenses when an employer is experiencing financial hardship. Usually, a reduction in hours coincides with a reduction in pay. Employers may use a reduction in employees’ hours to address other issues such as to increase employee morale and retention without affecting employees’ pay, though doing so is not all that common since it’s so costly.

The federal Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees at least the applicable minimum wage for all hours worked and overtime as applicable. Exempt employees must receive at least $455 per week.

The FLSA doesn’t prohibit employers from paying employees for time not actually worked. So, paying employees for 40 hours when they’re actually working only 36 is acceptable. But, it’s important each non-exempt employee’s hours actually worked are accurately documented to ensure overtime is applied appropriately and make sure record requirements set forth under the FLSA are being followed.

This entry was posted on Thursday, December 1st, 2016 at 2:27 pm and is filed under
Compensation.
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