DOL: Watch this legal pitfall in employee furloughs

These days, many employers are implementing mandatory furloughs to cut down on costs. But they need to be careful when exempt employees are involved.
The Department of Labor (DOL) discussed that issue in a recent Opinion Letter. An employer asked for the DOL’s opinion on this situation:
Because of a drop in business, the company started putting employees on furlough. Workers are first asked to volunteer to take time off. Then, if there aren’t enough volunteers, the company chooses employees on a rotating basis to take mandatory leave.
In both cases, employees are given the option of using accrued PTO. If they don’t have any accrued leave or choose not to use it, the time off is unpaid.
The problem: The mandatory leaves are often shorter than a full week. So the company asked the DOL: Can an employer deduct less than a week’s worth of exempt employees’ salaries when they’re forced to take time off?
No, the DOL responded. Salary deductions can be made when an exempt employee takes a day off for personal reasons. But, according to the Fair Labor Standards Act, “if the employee is ready, willing and able to work,” deductions can’t be made because the employer decides to keep them home.
Employers are also allowed to reduce employees’ weekly hours and change their salaries accordingly. But if hours and pay fluctuate from week to week, the employees will no longer be considered exempt.
Read the entire Opinion Letter here.

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