Answers to tricky HR questions: Cutting exempts working hours/pay
September 18, 2008 by Jim GiulianoPosted in: Answers to tricky HR questions, Employment law, Exempt non-exempt, FLSA, In this week's e-newsletter, Latest News & Views, Pay
Our team of experts fields real-life, everyday questions from HR managers and gives practical answers that can be applied by any HR pro in the same situation. Today’s question: Some exempt employees want to work fewer hours. Will a pay cut violate the Fair Labor Standards Act?
Question:
Some of our employees who are exempt under FLSA want to cut back their time from 40 hours a week to 35.
Can we decrease their pay by an amount proportionate the decrease in time? Or would that put us in violation of FLSA?
Answer:
No problem with decreasing their pay proportionately, says Caryn Pass, a labor attorney with Krupin O’Brien LLC.
Remind those employees, however, that if they cut back and then work extra time, they don’t get overtime pay for any time worked over 35 hours.
Tags: exempt, fair labor standards act, FLSA, overtime
Loading ...
September 22nd, 2008 at 4:00 pm
Keep in mind the federal minimum weekly wage a person can earn to be classified exempt is $455 / week. Make sure that decreasing pay doesn’t go below that level. Certain states can have even more stringent requirements. In New York, where we’re located, that minimum is $536.10 per week.
September 23rd, 2008 at 9:37 am
Question!! Can an exempt empolyee’s pay be reduced for poor attendence
October 2nd, 2008 at 5:37 pm
Question
If an employee is salaried, non-exempt and works less than 80 hours in a pay period, can they be paid for only time worked or must they receive pay for the full 80 hours?
October 20th, 2008 at 3:22 pm
To respond to CeeCee and Flo, I had a similar question recently, and was informed that you cannot reduce an exempt employee’s pay for being there less than the 80 hours. However, if your company offers vacation time, you can take those hours away from their vacation “bank”, reducing it by the number of hours they did not work. Thus, their paycheck is not reduced, but you don’t reward them for not being at work.
October 20th, 2008 at 4:15 pm
To CeeCee - you can pay only for hours worked for a salaried non-exempt - key is “non-exempt”.
October 20th, 2008 at 4:17 pm
I mis-stated my question. The employee is salaried, exempt and has exhausted all vacation and sick time. If they worked only 60 hours in a pay period, would we be required to still pay for 80 regular hours?
October 20th, 2008 at 4:36 pm
To answer CeeCee, I believe if there is a complete day missed, you can dock for that day. However, if the employee came in to work for 1/2 an hour and then went home, you must pay for that entire day. Were the 60 hours spread out over every day in the pay period or were there some whole days that were missed.
Also, was the exempt employee answering e-mail or cell phone calls while home, sick? This may consistute as working part of the day. In that case, the exempt employee gets paid.
Usually, the exempt employee is putting in additional hours over 40 per week, and available weekends on crunch projects. As an exempt employee, they are expected to put in as many hours as it takes to get the job done.
Conversely, if they are out for a portion of a day due to circumstances and don’t have vacation/sick time to cover it, it shouldn’t be a problem to pay them.
This is how I have always handled these situations, if this is not correct, someone please let us know
October 20th, 2008 at 5:24 pm
To quote directly from the Department of Labor web site:
“14)
Question: May an employer make deductions to an employee’s salary without jeopardizing the employee’s exempt status?
Answer: Deductions from a guaranteed salary are allowed only in limited circumstances.
Deductions from pay are permissible: when an exempt employee is absent from work for one or more full days for personal reasons other than sickness or disability, or is absent for one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness; to offset amounts employees receive as jury or witness fees, or for military pay; for penalties imposed in good faith for infractions of safety rules of major significance; or for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions. Also, an employer is not required to pay the full salary in the initial or terminal week of employment, or for weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act. § 541.602(b).”
If the absence falls under FMLA, you may have your answer in the last sentence. As for partial day absences, the next question in the FAQ’s on the DOL web site, Sue D is right, you must pay them for the whole day, however, that pay can consist of vacation time off for partial day absences, even if they do not have any vacation leave accrued:
“15)
Question: May an employer take deductions from an employee’s leave bank for partial day absences?
Yes. Employers may take partial day deductions from an employee’s leave bank, even if the deduction results in a negative leave balance; however, an employer may not dock an exempt employee’s salary for a partial day absence.
Under the final rules, employers may take deductions from employees’ leave accounts for partial day absences, the same as under the old regulations. The preamble specifically states that “employers, without affecting their employees’ exempt status, may take deductions from accrued leave accounts….” 69 Fed. Reg. at 22178. The preamble also cites approvingly to a number of Wage and Hour Division opinion letters allowing deductions from accrued leave accounts. Additional opinion letters, dated December 4, 1998, May 27, 1999, and February 16, 2001, similarly provide that employers may reduce the amount of accrued paid leave in an employee’s Paid Time Off plan, even if the employee is absent only for a partial day. The employer may reduce the leave so that the employee has a negative leave balance. However, the employee must receive the full guaranteed salary, even if there is no leave in the account or there is a negative balance, if the employee has only a partial day absence.”
Sorry this was so long, but it is a very complicated issue.
October 20th, 2008 at 5:51 pm
Great information Mary, and you’re right, it is a complicated issue.
What concerns me more, is that the questions sounds more like a policy management problem than anything. Many companies wait until the employee is completely out of time, before mentioning that the employee is abusing the time off policy! If a company and an exempt employee are going to be at odds with a days pay, there is something else wrong here. Does the employee use excessive time off? Is the employee irresponsible? Poor performance? If the employee is a great employee, then something can be worked out, and I am sure the employee feels bad about taking the day. If other circumstances exist, they need to be addressed, and not disguised in an attendance problem.