FAQ re: Furloughs and Other Reductions-in-Pay and Hours-Worked Issues

Furloughs and other layoff alternatives have gotten quit a bit of press lately, largely because of the economy. Employers often want to know what the legal implications of these programs are before implementing them. The U.S. Department of Labor (DOL), Wage and Hour Division has issued a new FAQ addressing these questions.  (FAQ re: Furloughs and Other Reductions-in-Pay and Hours-Worked Issues). It’s a good reference guide, which you should review if your organization is considering a flexible-downsizing initiative.  question marks.jpg

Here are two of the questions addressed that I see most frequently with clients:

Is it legal for an employer to reduce the wages or number of hours of an hourly employee?

In short, the answer is “yes.”  But Delaware employers should remember that employees must be notified of any change in pay in writing.  And a reduction in the predetermined salary for an exempt employee may result in the loss of exempt status, so employers should treat that idea separately.

Can a salaried exempt employee volunteer to take time off due to lack of work?

The question of paying exempt employees for time off is one of the most difficult in the wage-and-hour realm.  If the time off is (1) totally voluntary; (2) for a full day; and (3) is taken for personal reasons, other than sickness or disability, salary deductions may be made for the missed work.  Here, the key is that the choice must be truly voluntary.

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