Example: You don’t want to tell an employee you’re laying him off if you have no intentions of recalling him when business picks back up. It could result in countless phone calls from the person wondering when he can come back or — worse yet — legal trouble.

Three types of staff reductions

Furlough. The idea behind a furlough is to share the burden so companies can avoid layoffs. Everyone works reduced hours so all employees can keep their jobs.

Example: A company may furlough non-exempt workers one day a week for three months. Then the company can pay workers for 32 hours instead of 40.

If the company has exempt employees, furloughs can be tricky. Most companies furlough exempt employees for a specific number of full weeks during the year. And since employees’ work weeks aren’t split, their exempt status isn’t jeopardized under the Fair Labor Standards Act (FLSA).

Layoff. Usually layoffs are the solution companies use when the lack of available work is expected to be temporary.

When companies lay off employees, it means the employer expects to recall workers when business picks up again.

Reduction in force (RIF). When a company permanently cuts back on its staff, the move is called a RIF.

RIFs also can occur when the company decides laid off employees will not be recalled to work.

Question: We know that anyone making less than $455 a week is considered nonexempt and eligible for overtime pay. But is it OK to pay someone a fixed salary of less than $455 a week? And if so, what happens when that person works more than 40 hours in a week?

Answer: First, you can pay someone a fixed salary of less than $455 a week, according to employment law attorney John Lowe. That person still is considered nonexempt.

Second, if that person works more than 40 hours in a week, you’re obligated to pay overtime. Because of the overtime factor, it’s wise to have the person record the hours worked each week. That’s something you wouldn’t have to do with an exempt, salaried employee who doesn’t get OT pay.

A man who lived above The Front Room restaurant in Portland, ME, allegedly sprayed fox urine on a crowd of protesters who were outside his apartment.

Police said he became annoyed with the crowd, which had gathered outside of the restaurant to protest its alleged wage and hour violations under the Fair Labor Standards Act (FLSA).

The owner of the restaurant is currently facing a lawsuit that claims he didn’t pay his employees proper wages or allow them to take required breaks.

Along with several protesters, a police officer was among those hit with the urine, which is often used as a repellent to drive animals away from gardens.

The man was arrested and is currently facing assault changes. He was not employed at the restaurant.

(Answers at the bottom.)

1. It’s always against federal law for employers to reduce the wages or number of hours of an hourly employee.

2. An employer can draw down the vacation time of a salaried exempt employee when the employee is absent due to a lack of work.

3. A salaried exempt employee cannot volunteer to take time off work due to a lack of work.

Answers

1. False. The Fair Labor Standards Act (FLSA) doesn’t prohibit employers from lowering an employee’s hourly rate — provided the rate paid is at least the minimum wage — or from reducing the number of hours the employee is scheduled.

2. True. An employer can reduce an exempt employee’s leave for the time the employee is absent — provided the employee still receives payment equal to his or her predetermined salary in any week work is performed. But once all an employee’s leave is used up, he or she must still receive his or her full salary.

3. False. If the exempt employee’s decision to take time off is completely voluntary (and for reasons other than sickness or disability), he or she can take time off — and a salary deduction can be made.

St. Louis-based Panera Bread Co. agreed to pay $500,000 to settle a wage and hour class action lawsuit.

What happened:

Panera misclassified nearly 70 general managers who work in its California cafes as exempt from OT pay.

Here’s how the settlement will be paid out:

• The managers will receive about $75 per workweek they worked as general managers between Jan. 1, 2005 and Jan. 20, 2009.
• The plaintiffs’ attorneys will receive about $146,000 in fees and costs
• Pati Johns, the lead plaintiff, will receive $7,500
• The California Labor and Workforce Development Agency will receive $1,000 to settle claims of civil penalties under California law, and
• $25,000 will be set aside for administrator costs.

What happened

The company argued that the employees were “illegal aliens,” and therefore weren’t protected under the Fair Labor Standards Act (FLSA).

But the court ruled that didn’t matter. The FLSA is meant to protect all employees — regardless of immigration status — from abuse.

So the company lost its fight to get the case thrown out.

Do you think the court made the right decision? Let us know in the Comments Box below.

Earlier we reported that the U.S. Department of Labor (DOL) was hiring 250 investigators to seek out wage-and-hour violators — and the owners of five Oriental Forest restaurants, Li Jin Yang and Dong Lin, are among the latest to get caught in the DOL’s crosshairs.

They were found guilty of violating the Fair Labor Standards Act for failing to pay their workers proper OT and for paying less than the federal minimum wage — which at the time (2004) was $5.15 per hour.

The penalty: pay at least 129 workers more than $2 million in minimum wage and overtime compensation.

What’s required

Under the FLSA, the federal minimum wage is $7.25 per hour — or $2.13 in direct wages, if tips are considered part of wages. However, if an employee’s tips combined with the employer’s wage of $2.13 do not equal the $7.25 per hour, the employer must make up the difference.

It’s commonly believed that all IT professionals can be classified as exempt. But in fact, the FLSA’s computer employee exemption is very narrow, covering only employees who earn more than $27.63 per hour or $455 per week and:

• apply “systems analysis techniques and procedures,” such as consulting with users to determine hardware or software needs
• design, develop, create, test or modify computer programs based on user design specifications
• design, develop, create, test or modify programs related to operating systems, or
• perform a combination of those duties that requires the same level of skill.

By that rule, employees who repair hardware and help desk professionals whose only job is fixing problems, for example, may not be exempt.

However, if your company’s IT staff doesn’t meet those requirements, they could still be exempt based on the FLSA’s administrative, executive or professional exemptions.

For more details on the computer employee exemption, read the DOL’s fact sheet here.

A loan underwriter for a New York bank sued under the FLSA, saying he should be paid for the overtime he regularly worked.

His employer argued that he qualified as exempt, since he was an “administrative” employee.

Under the FLSA, an employee qualifies for the administrative exemption if he or she does work that’s “directly related to management policies or general business operations” and “regularly exercises discretion and independent judgment.”

No discretion involved
The man claimed he reviewed loan applications using the bank’s Credit Guide – a detailed document setting strict parameters for lending. He simply followed procedures to come up with a yes-or-no decision. No discretion was exercised.

The judge sided with the employee. The man was engaged in the “production” of loans – the fundamental product offered by the bank. Thus, he wasn’t an exempt employee.

Cite: Davis v. J.P. Morgan Chase

There’s been a 77% spike in Fair Labor Standards Act (FLSA) lawsuits regarding wage-and-hour disputes since 2004, according to the National Employment Lawyers’ Association.

More than 8 in 10 are OT-eligible

Even when companies are careful about compliance, many employees have a case.

Here’s a stat worth pondering: Nearly 85% of the U.S. workforce is OT-eligible.

So employers should be careful not to over-rely on time cards and time sheets to determine when someone qualifies for time-and-a-half. Otherwise, anything from compensable travel time to the minutes spent putting on safety equipment could be missed.