labor lawAdivision of labor law center

In an effort to reduce costs, many employers are considering furloughs – unpaid leave – for exempt employees. However, furloughs can be a legal minefield, if not handled properly, according to the SHRM, the Society of Human Resource Management.

 

According to the U.S. Department of Labor regulations issued in 2007, an exempt salaried employee is entitled to his or her full salary in any week in which the employee does any work at all – regardless of the number of hours that the employee works.

 

Under the federal FairPay regulations , an exempt employee who works for 10 minutes during the week is entitled to the same salary as if he or she worked 100 hours during the week.

 

Also under the FairPay regulations, if an exempt employee is ready, willing and able to work on a particular day, but no work is available, the employer must pay the worker for that day. For example, if the business in Kentucky is closed by a massive power outage, exempt employees must still be paid for that day. Hourly or non-exempt salaried employees need not be paid, under the FLSA or Fair Labor Standards Act.

 

This means that an employer cannot furlough an exempt employee for one or two days. Even if there is no work, or the employer asks the employee to remain at home and take the time off, the employee must be paid his or her entire salary for any payroll week in which the employee performs any work at all.

 

However, there is a way for employers to save money by furloughing exempt employees – as long as the furlough is for the entire payroll week. As long as the furloughed employee does no work whatsoever during the payroll week – including working from home – the employee need not be paid that week.

 

The complexity of these regulations is illustrated by the fact that even experts do not always agree on the interpretation of the law. One source at SHRM, who asked to remain anonymous, suggested that furloughing the employee for an entire payroll week would not be legal, if the company was shuttered. But, if the company continues to operate as usual, the unpaid furlough would be legal.

 

Despite dissenting opinions, most experts agree that as long as the exempt employee does no work whatsoever during the payroll week, the employee need not be paid.

 

 

 

Last 10 posts by Madison

• Parental Discrimination Laws - February 17th, 2010
• New California Exempt Employee Regulations - January 8th, 2010
• H1N1 Can Trigger FMLA - November 11th, 2009
• Independent Contractor Laws - October 2nd, 2009
• Georgia Minimum Wage - September 16th, 2009
• South Carolina Minimum Wage - August 14th, 2009
• Pennsylvania Minimum Wage Increase 2009 - July 29th, 2009
• Alabama Minimum Wage Increase 2009 - July 27th, 2009
• Oklahoma Minimum Wage Increase - June 15th, 2009
• New Illinois Nonsmoking Regulations - May 25th, 2009

1. Posted by: Judi

   It seems that your statement about “shuttering” — is wrong. Can you confirm this is correct. Many HR folks are questioning this.

2. Posted by: Madison

   Hi Judi!
   Presumably, the statement you are referring to is:
   “The complexity of these regulations is illustrated by the fact that even experts do not always agree on the interpretation of the law. One source at SHRM, who asked to remain anonymous, suggested that furloughing the employee for an entire payroll week would not be legal, if the company was shuttered. But, if the company continues to operate as usual, the unpaid furlough would be legal.”

   This statement is 100% factual. In researching this article, I emailed an HR Knowledge Advisor at SHRM named John S.[last name redacted] who emailed me that in his opinion, if the business is shuttered for an entire payroll week, the exempt employee must be paid. If the business is open, and the exempt employee does no work at all during the payroll week, even at the employers request, the employee can be unpaid.

   The SHRM Knowledge Advisor actually said, “”If the operations (sic) is closed for the week, the exempt staff would have to be paid for the week regardless of whether they performed any work.”

   That is not how we read the law. We read the FLSA to indicate that if the employee does no work at all during the payroll week, he or she need not be paid. But when a source as respected as the SHRM sends us a dissenting opinion, we feel duty bound to present both sides to our readers.

   When we asked John for clarification on this, he rather rudely referred us to one of their published articles that seemed to refute his opinion. His exact words are, and we quote: “Please refer to the article I sent you (reinserting link below), if the employer closes the facility and exempt employees are ready, willing and able to work, the exempt employees must be paid. If the facility remains open, then no pay is due exempt employees if they perform no work for the week.”

   On the other hand, the article John S. referred us to (which is only available to SHRM members) repeatedly states that an exempt employee who performs no work during the week need not be paid. It makes no mention of a different rule if the facility is closed.

   **Update on 2/15/09: During a follow-up question, the SHRM Knowledge Advisor agreed that our interpretation of the FLSA was probably more correct. If the exempt employee does no work for the entire week, even if the facility is closed, the employee need not be paid.**

   If you are an HR pro, we would love to hear your opinion on this issue. Please post your comments. Thanks for reading!~ Madison

3. Posted by: linda

   My husband recently got furloughed from his job in Ohio by a privately owned co. They told him they hope to call him back within 90 days, during this time he is alowed to collect unemployement. The problem here is that they keep calling him back in to the office for a day here and a day there. (paying him on a “sub contractor” basis of x $ per hr, he is responsible for the 1099 at the EOY). This in turn fowls up his unemployment status and he is constantly closing claims just to re-open them the following week. This can be a total nightmare, not sure if you’ve ever tried getting though to a unemployment office but it is nearly impossible. They are holding a severance pay package over his head telling him he will not get this if he refuses to work when asked to. IS THIS LEGAL???

4. Posted by: Amelia

   HI Linda! In most states, a worker does not have to close thier unemployment claim if they are working a day here and there as an independent contractor. The worker DOES have to report any income earned to the unemployment office. Usually, if the worker reports that he or she earned $100 in the week, their weekly benefit is reduced by about $100. But they do not constantly have to close and reopen claims, because they are not working regularly.
   Usually the monies earned have no impact on the total amount that the employee can collect from unemployment before it “runs out.” Example: John is eligible to collect $8,000 in unemployment. Even if John works as an independent contractor occasionally, he is still eligible to collect the entire $8,000 in benefits during his unemployment. It may be spread over more weeks, but he is still eligible to collect that amount.
   Not reporting the income at all would be fraud, so we don’t recommend that.
   There is no guarantee that the employer will offer a severance package, even if your husband continues to fill in on a 1099 basis. But, there is probably no harm in doing so. HTH, and thanks for reading the blogs!~ Amelia

5. Posted by: Elphonso

   Are thier different rules for State employees?

6. Posted by: Amelia

   HI Elphonso! Yes, thanks for bringing that up! The federal FLSA and Fairpay regulations apply to private businesses in the U.S. with revenue over $500,000 per year, or that do business in more than one state.
   The federal regulations do not apply to employees of the state or local governments, in most cases. In most states, those individuals must follow state law, which does permit unpaid furloughs shorter than a week. HTH, and thanks for reading the blogs!~ Amelia

7. Posted by: Suz

   My boyfriend is a salaried manager at his company located in KY (they also operate in CA, where he moved from.) During certain times at work, they have closed the office due to no work or bad weather. Even though he is a salaried employee, he is told that he must use his PTO in order to be paid for those days the office is closed. He knows this is not right, but is not sure how to go about approaching it with the employer.

8. Posted by: Amelia

   Hi Suz! Actually, this is entirely lawful, in both Kentucky and California. Employers have the right to dictate when an employee uses his or her PTO or vacation time. In some cases, an employer will shut down a factory for one week and require every worker to go on vacation on that same day.

   In other cases, exempt (or non-exempt) employees will be required to use their vacation time or PTO on days when the business is forced to close.

   The federal FLSA says that exempt employees must be paid their full salary for the payroll week, if they work at all, even if the business is shuttered for one or more days during the week. However, that law does not address the use of PTO at all.

   If your boyfriend had no PTO left, the company would still be required to pay him for the shut-down, unless he was off the entire payroll week. However, as long as he has PTO, he can be foreced to use it. HTH, and thanks for reading the blogs!~ Amelia

9. Posted by: Alicia

   This is very confusing. My brother’s company in CT just announced 7 separate furlough days for all employees. He is exempt and he is required to take these days as specified by the company (not together). Even worse, he is required to be on-call for some of those furlough days. They say that if he actually has to come on site (vs. not being called or handling things off site), his furlough date will be changed. But he can not travel in case he is called in. Is that really legal?

   Thanks!

10. Posted by: Amelia

    Hi Alicia! If your brother is an hourly employee or a non-exempt salaried employee, yes, this is legal. If your brother is a salaried exempt employee, he must be paid for any week in which he does any work at all, as long as he is ready, willing and able to work the entire week. However, the employer can require that your brother use vacation days or PTO to cover the furlough days. HTH, and thanks for reading the blogs!~ Amelia

11. Posted by: Kevin

    I was wondering how this would apply to a foreign national working under a visa (H-1B or TN for example). Since they wouldn’t qualify for unemployment benefits and since the visa is only valid as long as they’re employed/working, would they lose the visa status?

12. Posted by: Amelia

    Hi Kevin! Yes, in most cases the foreign national would lose his or her H1-B visa as soon as they cease to be employed. HTH, and thanks for reading the blogs!~ Amelia

13. Posted by: Joyce McMichael

    Are the exempt employee furlough regulations (exempt can furlough for a week if NO work done and not be paid) the same in all states? We are looking into this for some people in the state of New York, Missouri, Arkansas, Pennsylvania, and Minnesota. Do specific states have laws prohibiting this?

14. Posted by: Amelia

    Hi Joyce! Yes, these regulations are the same in all states because they are federal regulations under the FLSA, the Fair Labor Standards Act. All of the states that you mention either a) have no regulations at the state level regarding exempt employees or b) have state regulations that are the virtually the same as the federal regulations. HTH, and thanks for reading the blogs!~ Amelia

15. Posted by: Danielle

    We are thinking of requiring furloughs for our employees to save money during our slow season this summer. We would not close during any of this time and remain in operations. These employees are exempt status, but our payroll period is the 1st - 15th or 16th- end of month. Do we need to apply a furlough to the entire pay period, or can do this a week at a time?

16. Posted by: Amelia

    Hi Danielle! You could apply the furlough one payroll week at a time, under the federal FLSA. This is true, regardless of how long the pay period is. As long as the exempt employee does no work at all for the entire payroll week, he or she need not be paid for that week. HTH, and thanks for reading the blogs!~ Amelia

17. Posted by: JoLeen

    Message: How does a paid Holiday during the furlough week impact exempt employees ability to collect unemployment bennefits?

18. Posted by: Amelia

    Hi JoLeen! Employees often qualify for unemployment when their hours are severely reduced — as well as when they are entirely out of work. In this case, the employee must report any income to the unemployment agency. (Not doing so could result in the employee being charged with fraud.) However, this income would not result in an employee who otherwise qualifies for unemployment being denied benefits. It may reduce the benefits.
    We will add that it is unusual in many states for an employee who is furloughed for only one week to qualify for unemployment. HTH, and thanks for reading the blog! ~ Amelia

19. Posted by: Missy

    Our company is considering a week furlough. As an exempt salaried employee I would rather take five fridays off instead of one whole week. This way I still get partial pay instead of no pay. If I agree to work 4 days with pay and no work 1 day without pay (furlough), would this be legal, since I agree to it?

20. Posted by: Amelia

    Hi Missy! Unfortunately, no, this would not be legal. Employment laws are not matters of personal choice. Even if an employee agreed to work for less than the minimum wage, it would not be lawful. Even if an hourly employee agreed to work more than 40 hours per week with no overtime, it would not be lawful.
    By the same token, exempt employees are entitled to their full weekly salary when they work any time at all during the payroll week — even a few hours.
    If you took off 5 Fridays in a row, the employer would still have to pay your entire salary each of those 5 weeks, by law. For exempt employees, salary is all or nothing — it cannot be prorated. Either the employee is entitled to his or her full weekly salary, or they are not. If the employee does no work at all during a payroll week, then he or she need not be paid for that week. (There is an exception for employees on FMLA leave, or those with disabilities under ADA, but neither is the case here.) HTH, and thanks for reading the blogs!~Amelia

21. Posted by: Annie

    I am an exempt employee with 5 weeks of vacation. I have just been told that one of my scheduled vacation weeks will become a furlough week - no pay, no choice in what week. I was also told that I could not reschedule this vacation week and that I will not be able to take it in 2009. The company also has a no carry over policy of vacation and I will not be able to carry this week into 2010 nor will they pay me out for the week. I thought vacation time was earned time and an employment benefit. Can they do this?

22. Posted by: Amelia

    Hi Annie! This will depend partly upon which state you are in. If you were in California, for example, the employer would have to pay you for the week of unused vacation at the end of the year. In most other states, if you did not use all your vacation, you could lose it.
    However, the employer is essentially reducing your total vacation time by one week. If you are the only employee who is being treated like this, it may be illegal discrimination based on sex, race, color, religion, etc. If the employer was reducing every employee’s vacation balance by one week, or reducing the balance for every employee with 5 weeks of vacation by one week, and giving employees at least a week’s notice, that would most likely be legal. Vacation is a benefit but in most states it is not earned time — and even in most states where it is, the use-it-or-lose-it policy is legal. HTH, and thanks for reading the blogs!~ Amelia

23. Posted by: amy

    Hi, my business has informed all US Salaried Employees that we will be furloughed for 2 weeks in the next 2 quarters. We have been given 4 weeks to choose from (1 week in either July, August, October and November). I’ve choosen to take July and November. I live in Massaschusetts. I’ve learned that they obviously did their homework as they have been very clear that “no work is to be performed by furloughed employees”. Also, from what I understand the splittling up of these weeks will make it impossible for us to apply for Unemployment Benefits. Is this true? Will I be able to receive benefits at all. I was told it might be a good idea to go ahead and open a claim the 1st week just because it takes so much time and then when I take my November furlough I might be able to get benefits for the 2nd week? Also, is there a waiting period in Massachusetts. I just can’t seem to find the answers.

24. Posted by: Amelia

    Hi amy! You are right — this Massachusetts employer knows what she is doing. Like many states, Massachusetts has a one-week waiting period for unemployment during which the employee must be unemployed and looking for work, but collects no benefits. The second consecutive week, the employee qualifies for benefits. Because it is structured this way, you probably won’t be able to collect benefits for either week of furlough.
    The employer is structuring it this way, because if employees were eligible for unemployment benefits, the company’s unemployment insurance premiums would go up significantly. As tough as this is for employees, the alternative is probably laying people off permanently. HTH, and thanks for reading the blog!~Amelia

25. Posted by: Melissa

    Pertaining to government employee’s (specific-city municipality)
    Please clarify that exempt salaried are or are not permitted to take a day here and there to make up the furlough as it is implemented from the city? Or, for it to be legal, do we have to take a full week?

    Also, is there any legal restrictions to the extent that non-union individuals are being forced to take the furlough, but the union employees are not (according to their contracts).

26. Posted by: Don

    Regarding exempt employees furloughed for a week, does this mean absolutely no work at all? As in no phone calls or contact to anyone in the office regarding status of projects? ie.. shut my pc down, close up my blackberry, etc… I would appreciate an answer so I don’t get the company in trouble if I step over the line.

27. Posted by: Amelia

    Hi Melissa! Generally the federal FLSA does not apply to state or local government employees. You will have to consult the law in your state, city and county to determine if it is legal in your area. However, it is legal in most areas for city or state employees to be furloughed for a day or two. Many municipalities are going through this right now, due to budget crunches caused by the economy.
    Yes, it is legal to treat union and non-union employees differently. Many would say that is the purpose of joining a union. HTH, and thanks for reading the blogs!~Amelia

28. Posted by: Amelia

    Hi Dan! Yes, that means no work at all — even from home, even phone calls and checking the email on a blackberry. If the employee on furlough does even one minute of work during the week, he or she is entitled to their entire salary fo the week. HTH,and thanks for reading the blogs!~Amelia

29. Posted by: Daniel

    I am a salaried exempt employee in Connecticut. My employer is requiring that we take 10 days as furlough but the days are spread throughout the rest of the year with no two in the same week. I thought reading your responses above that exempt employees like me would lose our exempt status if our company did this. Do they get around this because they have lowered our salaries for the rest of the year instead of just not paying us for the exact days?
    Also they are requiring that for some of the days that we are on furlough, we also be on call. This will mean that we can not travel, must carry a cell phone and answer calls. Reading your responses I am confused since I thought that I could not do any work yet my company is asking me to do this. I appreciate your input!

30. Posted by: Amelia

    Hi Daniel! We can understand your confusion. Although your employer is calling this a furlough, it’s not — it’s a reduction in salary. An employer has the right to reduce any employee’s salary, including an exempt employee. The reduction need not be accompanied by a reduction in hours worked. As long as the reduction lasts for 3 months or more, it is considered “permanent” under federal regulations, and is legal.
    In addition to this reduction in salary, your company is giving you 10 additional days off at some point spread through the rest of the year. That is legal, because you will be paid your (new, reduced) weekly salary every week. Because you are still being paid your salary for the week, even if you work on some of those furlough days, that is entirely legal. I have posted several articles in the past few months on exempt employee salary reduction — you can read them in the archives. This is a confusing issue, so feel free to post any additional questions that you may have. HTH, and thanks for reading the blogs!~ Amelia

31. Posted by: Jacob M.

    Okay here’s my situation:

    I’m located in Utah and my company has a two week payroll period. The company is NOT privately held, but is a company traded on the PENNY STOCK MARKET. We do business across the US and internationally. We have a salaried employee in New York City and one in Washington, with the bulk of us in Salt Lake City, Utah.

    During the last few months I have been working maybe a day or two each pay period. I am a Salaried Employee. My company has been treating me and the other salaried employees like hourly employees and having us fill in time sheets showing the amount of hours we have been working. So for example in a payroll period of 2 weeks I work maybe 20 hours. The company would pay me 20 hours times an hourly rate.

    Is this legal? Do I have grounds to demand they start paying me a full pay periods worth of salary if I even do an hour of work during the pay period? Please help me out here!

32. Posted by: Amelia

    Hi Jacob! This may be legal…we don’t have enough information in your post to make that determination. It sounds like you and your coworkers may have been non-exempt salaried employees who assumed you were exempt employees.

    Because your company does interstate commerce, it is covered by the FLSA or Fair Labor Standards Act. Under the FLSA, any employee can be paid on salary, simply to make processing payroll easier. Salaried employees can be exempt or non-exempt. A non-exempt salaried employee is entitled to overtime when he or she works more than 40 hours in the payroll week, and can be paid less when he or she works fewer than 40 hours in the payroll week.

    Exempt employees are never entitled to overtime, regardless of how many hours they work in the payroll week. Under FLSA, exempt employees must fall into one of 5 categories based on their primary duties: Executive, Administrative, Outside Sales, Professional, or Computer Professionals. More details are on the fact sheet below.

    It appears that the employer is treating you and your coworkers as non-exempt salaried employees. You may have always been non-exempt, or the employer may have recently changed your status from exempt to non-exempt. Such a change is lawful, as long as it is permanent. The FLSA regulations define “permanent” as lasting for 3 consecutive months or more.

    It is always lawful and prudent for the company to track the number of hours that employees work, regardless of the employees’ exempt or non-exempt status.

    There is no law that requires the employer to ever treat any employee as exempt. Even the CEO can be hourly or salaried non-exempt, if the company chooses. But the employer cannot treat an employee as non-exempt one week and exempt the next. If there are weeks when you work more than 40 hours without being paid overtime, then you are exempt. In that case, if you work any portion of the payroll week, you are entitled to your entire weekly salary. HTH, and thanks for reading the blogs!~ Amelia

    Read more about this at: http://www.dol.gov/esa/whd/regs/compliance/fairpay/fs17a_overview.pdf

33. Posted by: Jacob M.

    Hi Amelia,

    I have a copy of my contract right here dated January 28,2009. It says that I am an ” Exempt Full time Employee”.

    Now my company does payroll on a TWO week basis. Do I have grounds to demand payment for that entire TWO week period if I do even an hour of work during that time period? Or do I only have grounds to demand a weekly salary as broken down on a weekly basis for each week that I do SOME work?

    Now Amelia, you say that “You may have always been non-exempt, or the employer may have recently changed your status from exempt to non-exempt. Such a change is lawful, as long as it is permanent. The FLSA regulations define “permanent” as lasting for 3 consecutive months or more.”

    I have several questions on this:

    Questions: Can my employer during any time this pay period change my status from EXEMPT to NON EXEMPT without informing me? Is that legal? Also if I confront them about this, and they decide to change me from EXEMPT to NON Exempt in the middle of the pay period does my new status of non exempt immediately take effect or is there a delay until next pay period? If it is immediate they could effectively deny me my entire salary for that pay period week and only pay me for the hours that I actually did.

    Essentially I am wondering can they do this at any whim? I understand it has to be permanent ( for at least 3 months) before they can change.

    I appreciate your assistance and look forward to your reply. =D
    While I wait I’ll read that link you gave me. Thanks

34. Posted by: Amelia

    Hi Jacob! Anytime there is an employment contract or written agreement in place, we suggest that the employee consult an attorney. We don’t give legal advice, and it is impossible for anyone to do so without reading the entire contract.
    The unit of measure for the salary and overtime law is the payroll week, not the pay period. The pay period can be a week, two weeks or (in some states) one month long — but the federal laws apply to the payroll week. If you genuinely are an exempt employee (and there is still doubt in our minds) then the employer would be required to pay your entire WEEKLY salary for any PAYROLL WEEK in which you performed any work at all. But not for the entire two-week payroll period.

    The best practice in HR would be to inform employees that their status has been changed from exempt to non-exempt. There is no law that payroll changes have to coincide with the beginning or end of a payroll period, or a payroll week. They could switch you from exempt to non-exempt in the middle of the payroll period. However, in many states payroll changes cannot be retroactive. But again, it appears that the employer may have changed your status from exempt to non-exempt already.

    Yes, any employer can change any employee’s status (exempt, non-exempt, part-time, full-time, employed or unemployed) at a whim (as you put it) at any time in Utah and most other states.

    If the policy requiring salaried employees to keep detailed time logs was recently introduced, our best guess is that they switched exempt employees to non-exempt at that point.

    A word to the wise. You certainly should tactfully raise this issue with your employers. However, confrontation is seldom effective, especailly if you wish to continue to be employed with this company, or receive a good reference from them. HTH, and thanks for reading the blogs!~ Amelia

35. Posted by: Tammy

    What about a local municipality changing an exempt employee to a non-exempt employee for an entire pay period? Our City has instituted this practice to make furlough days mandatory as unpaid holidays during these periods.

36. Posted by: Amelia

    Hi Tammy! This would be unlawful if a private employer did it. However, the FLSA and FairPay regulations are federal laws. They do not apply to employees of state or local governments. HTH, and thanks for reading the blogs!~ Amelia

37. Posted by: Leslie

    I am a psychiatric social worker employed in a hospital. I work on a small team. Our unit was downsized and our total FTE’s were reduced. Just this week, they announced to us that we will now be hourly whereas we had been salaried. Like nursing staff, we will be “called out” when the census is low (as it has been very low). I gather this is all legal, but can they switch us back to salaried if things pick up? Can we apply for unemployment if we miss wages for days when the census was low? The nature of our jobs and duties have not changed. . . .

38. Posted by: Amelia

    Hi Leslie~ Yes, as long as the change from exempt to non-exempt (or back) lasts for at least 3 months, under federal law it is considered permanent and is lawful.
    There is no law that any employee must be treated as exempt, ever. Even the CEO could be paid hourly, if the company wished. Your employer could have unilaterally reduced your salary without any reduction in hours. However, they choose the more honorable path of making all social workers on the unit non-exempt, and paying you only for the time you worked. You can certainly file for unemployment for missed days of work. HTH, and thanks for reading the blogs!~ Amelia

39. Posted by: Suz

    I am a salaried employee in Kentucky. I typically work Monday-Friday, but during busy times will work overtime (which as an exempt employee I don’t get paid extra for). However, when I work weekends in addition to my work week, should I be forced to use a day of PTO for being off on a holiday? For example, I worked from June 22 to July 2 with no day off, and then for the July 3 holiday day, was forced to use a PTO day in order to get paid for the holiday. Is this kosher?

40. Posted by: Amelia

    Hi Suz! Your employer is being a real stinker…but this is legal.
    There is no law that an employer must provide paid holidays or PTO. If the employer does provide paid holidays or PTO, the employer sets the policies regarding them. The federal laws state that an exempt employee who works any portion of the week must be paid his or her full salary for the week. (There is an exception if the employee takes a full day off due to illness or for personal business.) So the law says that you must be paid for the entire week. But it permits the employer to count that time as PTO.
    The employer’s statement that you are required to use a day of PTO to be paid for the holiday is not entirely correct. Even if you had no PTO time available, legally the employer would have to pay you for the entire week. However, they can have a company policy that you must use a day of PTO, or they can automatically deduct the PTO from your balance — as long as you receive your usual salary for the week. (They could also require that you work on the holiday.)
    If you work for a large company, it is possible that the person processing payroll has no idea that you have been working 7 days per week. They simply put through one day of PTO for every exempt employee. If this is the case, you could certainly raise the issue tactfully with your supervisor or HR — but that may not change the answer.
    Otherwise, as we noted above, your employer is a real stinker, and we would totally understand if you were looking for a better job. HTH, and thanks for reading the blogs!~ Amelia

41. Posted by: Ann

    I am an exempt employee, living in Texas. My company is about to announce that everyone is required to take a one week furlough. My question is this - I have vacation time earned, can my employer keep me from using a week’s vacation to cover my unpaid week?

42. Posted by: Amelia

    Hi Ann! No, the company cannot be compelled to allow you to use your vacation time while on furlough. Employers have the right to schedule vacations at their convenience — not the employees.
    In this case, the employer is putting workers on furlough to save money on payroll. If they pay you, they will no longer be saving money. It will defeat the whole purpose of furlough. (If they permit you to take vacation, they will also have to allow others to use their vacation while on furlough.) The best bet would be to request vacation time for a different week. HTH, and thanks for reading the blogs!~Amelia

43. Posted by: Cristie

    Ok here is a tricky situation…my boyfriend is a salaried employee in Wyoming who has been forced to work outrageous hours and be on call 24/7 due to the economy and cute backs. What are the laws for overtime if any at all? As well as having to work these hours, the company recently told them that they are required to take a week of furlough days every quarter. Can this be split up into days so we don’t lose out on a full weeks pay at a time? As we understand it, the company has already deducted their furlough hours out of each pay period, regardless if they work it or not. We also are wondering if it is standard for salaried employees to have a set amount of hours reported on the pay stub, rather than the “actual” hours worked? We are new to being salaried and hope you can answer our questions
    Thanks

44. Posted by: Amelia

    Hi Cristie! It sounds as if your boyfriend is an exempt salaried employee. Everything you mention is fairly standard for an exempt employee — they are not entitled to overtime, ever. The employee is paid the same salary every week, whether he works 40 hours or 120 hours. The pay stub usually shows 40 hours, regardless of how many the employee actually works. (That just makes payroll processing easier, and since the employee is not entitled to overtime, there is no need for the company to accurately track hours worked.)
    As discussed in the article above, no, your boyfriend cannot take a day or two of furlough here and there instead of a full week of furlough. An exempt employee who is furloughed for a few days in the pay period must be paid his entire weekly salary. The purpose of furloughing exempt employees for a full week is to save payroll — the employees are not entitled to any payment whatsoever for that week. That’s what a furlough is.
    It seems unlikely that the furlough has been prorated and is being deducted from the employees’ salary spread over several weeks. (That would be illegal under federal law.) It is more likely that the employee’s salary has been reduced, permanently — which is legal. Check out the links below or search our archives for a better understanding of exempt employee status. And feel free to post any additional questions you might have. HTH, and thanks for reading the blogs!~ Amelia

    Read more about this at:
    http://www.dol.gov/esa/whd/regs/compliance/fairpay/fs17a_overview.htm
    http://www.dol.gov/esa/whd/regs/compliance/fairpay/fs17g_salary.htm

45. Posted by: Lu

    hi Amelia,

    Great blog here, but can the company request that all employees take a week’s furlough, and then closer to the time, allow a couple of individuals work due to the projects they are working on? Can they treat individuals differently based on the jobs they do?

    thanks

46. Posted by: Amelia

    Hi Lu! Yes, a company can treat different employees differently, based on the jobs they do — especially when there is a valid business reason to do so. (If this were not the case, the company would have to pay every employee the same salary, just to cite one very obvious example.) It sounds as if there is a valid business reason for this action. If the company were making this decision based on race, color, sex, disabilit, religion, national ancestry, etc., that would be illegal discrimination. HTH, and thanks for reading the blogs!~ Amelia

47. Posted by: william

    I am an exempt employee for a County in Minnesota. As a County employee would I be covered by FLSA? The County is requiring all non-union employees to take 6 furlough days for the year. Reading on the blog this seems to be a problem if not required to be done all in one week.

48. Posted by: Amelia

    Hi william! No. The federal FLSA does not apply to federal, state or municipal employees. It primarily applies to businesses who engage in commerce between state lines — which is most private businesses. State law would apply, and most states do permit government employees to be put on unpaid furlough. HTH, and thanks for reading the blogs!~ Amelia

49. Posted by: reba sturles

    I am classified as an exempt employee with a company in Texas the business is convience stores. My employer owns more than 300 stores, I “manage” one of the stores. During the course of a week I wear the hat of a clerk, for about a quarter of the time, and I work in excess of 50 hours a week, this past week I put in 71 clocked in hours. I get no overtime, and am under the constant threat that my pay will be cut if I do not remain on call 24/7. My question is Is this legal? What happens to a personal life? Time to clean the house, have an occasional dinner with my family,or even do the laundry. I was just off today and my telephone has rung eight times all work related. Since Christmas 2008 I have had one uninterrupted day off. Doing the math dividing my pay of $503.00 by 71 hours I do not make minimum wage for weeks such as this, which have become normal for this position that I hold.

50. Posted by: Amelia

    Hi reba! This is a tough situation and you have our empathy. Unfortunately, yes, this is legal under both Texas and federal law (or in almost any other state.) Under federal law, an exempt employee must make at least $455 per hour before taxes — you satisfy that requirement. The fact that you are constantly taking calls from work supports the exempt status — your primary duties are those of a manager, not an hourly convenience store clerk. There is no limit to the number of hours that an employer can require an employee to work. In some industries, as in yours, it is normal for an exempt employee to work 50 to 70 hours per week. You are correct that this does not provide a good quality of life.
    If you are in a position to train other staff members, that might cut down on the number of calls you receive and at least allow you to take uninterrupted days off. Our only other suggestion would be for you to look for a better job when the economy improves. HTH, and thanks for reading the blogs!~ Amelia

51. Posted by: Shelly

    This is a great source of information. Here is the situation/question - Our Connecticut based company (publicly traded on NYSE) has implemented 7 “furlough” days throughout the year - for the most part pairing them with traditional holidays. I am an exempt salaried employee. The company is not paying us for those furlough days. Is that legal ?

52. Posted by: Amelia

    Hi Shelly! Thanks for the kind words! No, one-day unpaid furloughs for exempt employees are not permitted under the federal FLSA or Fair Labor Standards Act. Hourly employees need not be paid for furlough days. However, exempt employees must be paid the same weekly salary regardless of the quantity or quality of work performed that week. If the employee works any portion of the week, and is ready, willing and able to work the entire week, the exempt employee must be paid his or her full weekly salary. (The employer can require that the exempt employee use PTO for the furlough days, but must still pay the employee.) Different rules apply when the employee is absent due to illness, or for personal business.
    In this case, it appears that the salaried employees are being treated as non-exempt employees. This would indicate that the employees never were exempt, and they would be entitled to payment for any overtime worked for the past 3 years. Our suggestion would be that you tactfully raise this issue with the employer, perhaps approaching it as, “I just don’t want this to create legal problems later.” If that doesn’t work, then wait until the first furlough day and file a complaint about unpaid wages or overtime with the US Department of Labor at http://www.dol.gov. HTH, and thanks for reading the blogs!~ Amelia

53. Posted by: Nathaniel Merriweather

    Hi

    I am an exempt employee at a 501c3 nonprofit organization. The entire organization was asked to take 2 one week furloughs (one during the christmas/new year holidays and another week at the employees choosing). Recently, it was announced that 6 employees would have to take an additional furlough - this time these 6 employees would have take fridays off (reducing work/compensation time to 4 days a week) for an undetermined amount of time. I am curious if this legal. If not, what types of steps can these employees take as far as legal recourse?

    Thanks,
    NM

54. Posted by: Amelia

    Hi Nathaniel! The two one-week furloughs are lawful. As long as the exempt employee does no work whatsoever during the payroll week, he or she need not be paid. However, asking exempt employees to take every Friday off without pay is not lawful. An exempt employee must be paid his or her full salary for any week in which the employee does any work at all, under the federal FLSA, the Fair Labor Standards Act.
    If your employer is a state or local government agency, the FLSA may not apply. If it is a private non-profit entity, the the FLSA may very well apply.
    It is also possible that the 6 people involved are salaried, but are non-exempt employees.
    There are two actions that you can take. The first would be to contact the U.S. Department of Labor, Wage and Hour Division at http://www.dol.gov for their opinion on this situation. The second would be to file a wage claim with the U.S. Department of Labor (and/or your state department of labor) for any week in which you are paid less than your full salary. HTH, and thanks for reading the blogs!~ Amelia

55. Posted by: Whitney

    I am a full-time exempt employee for a mid-sized international company (publicly traded). Several months ago the company implemented what was entitled “FTE” days for exempt employees. Meaning, 1 day every pay period (2 weeks) we were required to be off on “furlough.” Our salaries were cut by 10% as well. There was an emphasis on the fact that no work was to be performed on the furlough days, that they would have to remain flexible (you could plan for them, but couldn’t necessarily count on taking them) and that for every 2 week pay cycle one week of billable time should add up to 32 rather than 40 hours.

    My question is this, after my salary was reduced by 10%, I billed upwards of 90 hours every 2 weeks and was not able to use most of the “furlough” days. Is this legal?

56. Posted by: Amelia

    Hi Whitney! Yes, this is entirely legal. An employer can reduce exempt employees salaries across the board — and that is what your employer has done.
    There was actually no requirement for the employer to reduce the number of hours that the exempt employees worked, or to grant furlough days to exempt employees.
    The only part of your question that is problematic is the fact that the employer seems to have stated that each 2 week pay cycle should have included 72 hours of work rather than 80. Ironically, when an employer reduces the salary for exempt employees, the employer is in a better position if the hours worked remain the same. So there is actually no problem with the fact that you are still working 90 hours every two weeks. (Hopefully your boss realizes this and will give you a larger salary increase when times are better.)
    Again, it is the reduction in hours rather than the reduction in salary that is problematic. But as long as the salary reduction applies to all exempt employees, we see no legal problem here. HTH, and thanks for reading the blogs!~ Amelia

57. Posted by: Tony C.

    Hello,

    Concerning pay definitions for exempt and non-exempt employees I have an employer who has most of his employees on a “base pay” with required hours. For example: If an employee is paid $2,000 per month and required to work 182 hours for the month and is short hours his pay will be deducted by the number of hours he is short. Lets say 5 hours short that would make his pay short $54.95 or $1,945.05 for the month instead of $2,000. But if the employee works 200 hours no addtional money is earned - is this legal?

    Also, my employer is wanting to close down for 1-week each month unpaid and not allowing employees to use vacation during that time - is this legal?? If so how long a furlough can an employer put you on without pay or use of vacation?

58. Posted by: Amelia

    Hi Tony! No, this form of payment is probably not lawful — but it depends upon which state you are in. Each state has different minimum wage and payroll laws. However, most employees in the U.S. are covered by the federal minimum wage and payroll law — and we are going to answer your question based on that. A salaried employee can be either exempt or non-exempt. Exempt employees must fall into one of 5 categories under the federal FLSA, based on their primary duties: Outside Sales, Computer Pros, Professionals, Executives and Administrators. Exempt employees are never entitled to overtime. However, they must be paid the same salary every week they work, even if they work fewer hours than expected.
    Any employee can be paid on salary to make processing payroll easier. However, not every employee is exempt. A salaried non-exempt employee is basically an hourly employee. The employer must pay overtime at 1.5 times the employee’s average rate when the employee works more than 40 hours in the payroll week. In addition, the employee can be paid less when he or she works fewer hours. In your example above, the employee is paid about $10.99 per hour. An employee who worked 44 hours one week would be entitled to $439.60 salary for 40 hours, plus 4 hours at $16.49 per hour, or $65.96 for overtime. That makes the employee’s weekly earnings $505.56. (Note that under the FLSA, salary and overtime must be calculated weekly, even if they are paid bi-weekly or monthly.)
    When an employer treats an exempt employee as non-exempt by docking his pay for working fewer hours, the employee is usually entitled to overtime for the past 2 years. If this is the case, file a wage complaint with the Wage and Hour Division of the U.S. Department of Labor at http://www.dol.gov.
    However, your use of the term “base pay” suggests to us that these may be commissioned salespeople who are being paid a “draw” against commissions. If so, that changes the picture considerably.

    Yes, the employer can close down for one week each month and not allow employees to use vacation time. As we noted in the article above, exempt employees need not be paid if they perform no work at all during the payroll week. Non-exempt employees are entitled to payment only for the hours they worked — in otherwords, no pay if the shut down is for the entire week. There is no limit to the number of weeks that the employer can put employees on furlough. An employer could put workers on furlough for 2 weeks, 10 weeks, or 52 weeks. Or, the employer could put workers on furlough forever, by shutting down the plant.
    Any employee who is on furlough for one week or more should file for unemployment. Unfortunately, in some states if the employee returns to work after one week, they will not be entitled to any unemployment benefits. HTH, and thanks for reading the blogs!~ Amelia

59. Posted by: kim

    I am an hourly employee and was told today that our entire staff would be on a two week furlough starting at end of business today. We have not been paid for hours worked this pay period and were told that we would not be paid next week on our usual pay day; leave the keys to the building and our alarm entry codes were deleted today. The BOD of our 501c3 organization located in South Carolina will use this time to determine what steps to take next. We were told bankruptcy of some type. Can they place us all on a two week furlough even though they have not paid any of the employees? This was all verbal and I requested those facts in writing, including the fact that they are not going to pay us for time already worked. This company does not hold back a pay period and they are in severe financial trouble. Is our furlough legal? Why do they not have to pay wages for all of their employees? Can we apply for unemployment on Monday?

    I was told that there will be a letter issued by the organization’s lawyer on Monday.

    In need of information in South Carolina.

60. Posted by: Amelia

    Hi kim! These are two entirely separate issues. Yes, any employer can shut down for two weeks for finiancial reasons. If the employees do no work at all, there is no law that the employer must pay them for the two-week furlough. This is true for both hourly and salaried exempt employees. Many employers have done this during the past year, for economic reasons.
    However, under the federal minimum wage laws, employees must be paid for all hours worked. It is unlawful for the employer to refuse to pay you and the other employees. You should immediately file a wage complaint with the U.S. Department of Labor at http://www.dol.gov. (In addition, you may want to sue the employer in small claims court for the unpaid wages.) In most areas, a state agency would assist you, but since South Carolina has no minimum wage law, you have little protection from the state.
    Here’s the problem: even the U.S. Department of Labor cannot get blood out of a turnip. If the employer genuinely goes bankrupt or out of business, the employees simply become one more unpaid creditor. If there is a bankruptcy, you may eventually be paid — but it could be only 1/10 to 1/4 the amount you are owed.
    An ethical employer does not permit employees to work, if the employer has no way to meet payroll. So this employer is showing that they are having severe financial problems, and that they are unethical. You should take two additional steps. First, file for unemployment benefits. Second, spend at least 40 hours per week looking for a paying job. At this point, even a minimum wage job is better than working for this unethical organization.
    We suspect that this employer will close its doors and never reopen. If the employer does call you back to work, you should treat it as a temporary job, and be aware that you may not be paid for the hours worked. (In many cases, an employee who quits because the employer doesn’t pay them qualifies for unemployment benefits. So does an employee who is on furlough.) HTH, and feel free to post any additional questions!~ Amelia

61. Posted by: Jerry

    I am a salary exempt engineer in Illinois and I currently work for a Swedish based company in Illinois. The “office” personnel (above a specific salary class) are required to take a furlough day each week and receive only 80% of our bi-weekly salary. Some areas of the office are working a full week and earning their normal bi-weekly salary. Also, we were told that there will be a special project requiring select individuals to work full weeks, but still be paid only 80% of our bi-weekly salary. Is this a fair practice and if not, could you recommend an appropriate course of action.

62. Posted by: Amelia

    Hi Jerry! This is not a furlough, even if the employer is calling it that — it is a salary reduction. And as far as we can tell, it is a lawful one.

    It sounds like the company has imposed a salary reduction for exempt employees in certain departments or jobs. An employer can lawfully take this action without changing the number of hours that employees work. We would prefer to see the salary reduction apply to all exempt employees, but as long as there is a valid business reason for it to affect only some employees, that is lawful. We will also note that it is not unusual. Across the nation, the average exempt employee has had a 20% pay cut in the past 18 months — and that’s not counting those who are unemployed.

    The salary reduction needs to remain in effect for 3 months or more. Exempt employees cannot be paid more during weeks when they put in more hours. Doing so would make them non-exempt employees, entitled to overtime.

    The employer has also reduced the number of hours that the exempt employees are expected to work each payroll week. This is generous — again, the employer could simply require the employees to put in the same number of hours for lower salaries. Although the employer is calling this a “furlough day”, in fact, even if the employee worked that day they would not be entitled to additional pay.

    Is this fair? Maybe not. Again, it would be fairer to reduce salaries across the board. But many actions that are not fair, are lawful, under federal and Illinois employment law — and this action is lawful. This is a complex issue, so feel free to post more questions if you have them. HTH, and thanks for reading the blogs!~ Amelia

63. Posted by: Italy10

    HELP!!! Our employer is offering the following two options to ALL THE SALARIED STAFF:

    Option 1: 5% pay cut and 3 furlough days by the end of 2009.

    Option 2: Pay remains the same 6 furlough days by the end of 2009.

    Company wide shut down ONLY the week do of dec. 28-31. We are not being paid the day after Thanksgiving although we are required to work the three days prior. We are not being paid the day after Christmas but are being asked to Volunteer for inventory the week of Dec. 21-23.

    If I understand they MUST pay us for thos weeks but not for the shut down week. Is that that federal law, we are in Indiana.

    Thank you so much!
    Italy10

64. Posted by: Italy10

    Sorry I want notified of your response!

    Thank you!

65. Posted by: Amelia

    Hi Italy10! Under federal and Indiana law, a salaried employee can be either exempt or non-exempt. Non-exempt salaried employees are basically hourly employees — they can be paid less during weeks they work fewer than 40 hours, and must be paid overtime during weeks when they work more than 40 hours. It sounds like the employer is treating you as non-exempt salaried employees. The changes the employer proposes are all lawful if you are non-exempt employees.

    However, if you are exempt employees, that changes the picture. Exempt employees are never entitled to overtime, even if they work 60 or 80 hours in the payroll week. By the same token, exempt employees are entitled to their full weekly salary when they work fewer than 40 hours in the payroll week.

    For non-exempt employees: They must be paid only for the hours worked.

    For exempt employees: The employer can impose a salary reduction of 5% (or more) without any change in hours worked. However, an exempt employee who is ready, willing and able to work the entire week, and works any portion of the week, must be paid for the full week — even if no work is available on one or more days. In other words, if the employee is furloughed for one day, the exempt employee must be paid for that day. If the exempt employee is furloughed for an entire payroll week, the employee can lawfully be unpaid for that week.

    Option 1: The pay cut is lawful, but the exempt employee must be paid for the 3 furlough days.

    Option 2: The exempt employee must be paid for the full week if they do any work whatsoever during the payroll week — even a few minutes of work. If the company is shut down the entire payroll week (For Dec. 28 to Jan.1) the employees need not be paid. If an exempt employee works even 10 minutes during that week, he or she is entitled to the full weekly salary.

    Exempt employees must be paid for the entire payroll week of Thanksgiving, if they work 3 days.
    All of the above regulations are under the federal FLSA or Fair Labor Standards Act. It applies to employees engaged in interstate commerce, and to businesses with more than $500,000 in annual revenue. Note that smaller businesses are not covered, although they may be covered by a state law.

    We think you may be mistaken about your reference to employees being asked to volunteer for inventory on Dec. 21 to 23. We suspect that the employer is asking employees to volunteer to perform inventory, instead of their normal duties. Obviously, employees who do inventory must be paid for the time they work. It would be a violation of federal and state minimum wage laws for a business to ask employees to volunteer in the sense of “working for free.”

    This is a complex issue, so feel free to post more questions. HTH, and thanks for reading the blogs!~ Amelia

66. Posted by: Amelia

    Hi again, Italy 10! Sorry but we cannot inform readers via email when their questions are answered. Please check back frequently for updates. Thanks!~ Amelia

67. Posted by: Italy10

    Thank so much for the information and so quickly. The volunteers for inventory means you can come in but it’s not mandatory. We are all exempt in the office, so they would have to pay us for that week our normal salary. Correct?

    Example:

    I chose option 2, I worked last week M-Th, but took Friday as my last 1st “furlough” day, but they have to pay me my salary even though I was not here. Is that what I am understand?

    It’s all so confusing and of course they are putting it to us like Stereo instructions and saying that it’s all completely legal……..they have consulted their legal advisors.

    This is a small company 80 employees but we will make over $17M this year.

    HELP!

    Thank you!

68. Posted by: Amelia

    Hi again Italy 10! You are more than welcome! We are very happy to reply ASAP.

    Yes, this is puzzling if you are all exempt employees. And a $17M company is certainly covered by the FLSA.

    We also agree with your assessment of the inventory situation. It sounds like the employer will close Dec. 21 through 23 for inventory. They are asking for volunteers to work by taking inventory on those days. You are correct that an exempt employee who is off on those days, but worked a portion of the payroll week, is entitled to payment for the entire payroll week (as long as the employee was available to work at his or her usual job on Dec. 21 to 23.)

    In your example, you are entitled to payment for the entire payroll week, since you worked 4 days of the week and were put on a furlough for the fifth day. Again, the employer could reduce your salary every week, but they cannot prorate your salary when you work fewer hours during the week.

    Our suggestion is that you wait to receive your paycheck. If you have not been paid your full salary, file a wage complaint with the US Department of Labor at http://www.dol.gov.

    Either the company is lying about seeking legal advice on this issue, or there is a factor we are not aware of (such as the workers being independent contractors, not employees.) Keep us posted — we’d love to hear how this one turns out! HTH, and thanks for reading the blogs!~ Amelia

69. Posted by: Lee

    A privately owned Pennsylvania company has furloughed all employees for a total of 5 days thoughout the year (non-consecutive). This includes exempt and non-exempt employees. Am I correct in understanding that they can’t furlough exempt employees for 1 day, 5 times a year? What if an employee is requested to attend a company meeting on a furlough day? Is that legal?

70. Posted by: Amelia

    Hi Lee! Assuming that the company is covered by federal law, you are correct. The federal FLSA applies to companies with more than $500,000 in annual revenue, and to employees at smaller companies who engage in interstate commerce (such as accepting credit cards for payment or answering the phones.)

    An exempt employee who does no work for the entire payroll week need not be paid for that week. However, if the exempt employee does any work at all during the week, and is ready, willing and able to work the entire week, the exempt employee is entitled to his or her full salary for the week. An exempt employee who was not paid the full week’s salary should file a wage claim with the US Department of Labor at http://www.dol.gov.

    An exempt employee who attends a meeting on a furlough day (or any other day) is working.

    Hourly employees are entitled to payment for the hours they work. HTH, and thanks for reading the blogs!~ Amelia

71. Posted by: Elana

    Our company has decided that exempt salaried employees will work 32 hour work weeks and be required to take one day off per week, same day each week (of our choosing unless work dicates otherwise). We all still work on our day off as most of us are on call and can log in remotely from home. As you can imagine many of us have chosen to take off on Friday. Here is the problem… because of the short work weeks during the holidays we have been informed that there will be no day off besides the paid holiday for exempt employees. For our hourly employees that regularly work 40 hours they work the 3 or four days we are open and then receive holiday pay for the balance. Our exempt employees feel they are being taken advantage of because hourly employees are being paid hoilday for a day we are regularly scheduled not to work and we do not receive a day off to make up for it. Please note that if exempt employees physically go to work on their day off they receive comp time for it. Is all of this legal?

72. Posted by: Amelia

    Hi Elana! Yes, this is all legal as long as the exempt employees are paid the same salary, regardless of the number of hours worked during the week. If their salary fluctuated based on the number of hours worked, they would not be exempt employees.

    Any exempt employee who is only working 32 hours per week has nothing to complain about — even if their salary has been reduced. Many employers are economizing by having exempt employees work 60, 70 or more hours per week, every week in this difficult business climate. Often they are responsible for filling in for hourly employees, in addition to their regular duties.

    It is completely legal to treat exempt and salaried employees differently — in fact, many times the law requires it. Under the law, the employer must pay the exempt employee for the full week. Therefore, it is certainly reasonable for the exempt employees to work the full “week” — especially since they are on a 32-hour week anyway. In fact, again, the employer could require that exempt employees work 72 hours that week.

    The employer has (apparently) reduced salaries and work weeks for exempt employees in an effort to avoid layoffs. Instead of being grateful, the exempt employees are complaining because they only get 3 days per week off and do not get 4 or 5 days off on holiday weeks!

    The employer is being more than generous by granting comp time to an exempt employee who works an extra day during the week. There is no legal requirement that they do so. Tell the exempt employees to quit whining, be thankful they have a job, and go back to work. HTH, and thanks for reading the blogs!~ Amelia

73. Posted by: Elana

    Amelia,

    Unfortuantely exempt employees are required to use their PTO if they work less than 4 hours per day, for example if I work 3 hours one day and 40 hours the remainder of the week (total of 43 hours) I am required to use 5 hours of PTO to receive the same pay. Am I correct in believing that changes our exempt status?

    Thank you so much for all your help. Elana

74. Posted by: Amelia

    Hi Elana! No, that does not change your exempt status. The federal FLSA or Fair Labor Standards Act requires that an exempt employee who works part of the day be paid his or her full salary for the day. However, there is nothing in the federal law that would prevent the employer from charging the employee’s PTO account for the time. What is important is the amount on the employee’s paycheck, not whether it was tabulated as PTO or not. (A very few states, such as California, do set limits on this use of PTO.)

    There is no state or federal law that an employer must offer PTO, paid vacations or sick time. If the employer does offer these benefits, the employer establishes the policies regarding them. The policy that an exempt employee who works less than 4 hours one day must use PTO to make up the difference is entirely reasonable and lawful, and does not change exempt status.

    The employer could require that an exempt employee work 60 hours per week, and charge an exempt employee for PTO time if the employee only worked 58 hours one week.

    However, if an exempt employee had no PTO available, and worked a portion of the day, the employee would be entitled to payment for the entire day. The employee could be disciplined or terminated for not meeting the employer’s performance expectations, but would be entitled to his or her usual salary for that day.

    Suppose Marie is an exempt employee who normally works 40 hours per week. She works 3 hours one day this week, and totals 35 hours during the payroll week. Marie is entitled to her full weekly salary. It can be counted as 40 hours worked, or 35 hours worked plus 5 hours of PTO, as long as she is paid an amount equal to her full weekly salary. However, if the employer prorates Marie’s pay so that she is paid 35/40 of her usual weekly salary, that would mean that Marie is a non-exempt employee entitled to overtime. HTH, and thanks for reading the blogs!~ Amelia

75. Posted by: Susan

    If I am an exempt, salaried employee, can my employer constantly require me to work Saturdays and Sundays that are not part of the regular work week? Is there a maximum to the number of days they can require me to work without a day off? Since I am a salaried employee, I do not receive overtime pay for the additional weekend days always being worked nor am I compensated any time off. Our typical work week is supposed to be M-F, but we are constantly being required to work weekends not allowing us to make any personal plans for the weekend…days which are typically an employees’ own.

76. Posted by: Amelia

    Hi Susan! Sorry, but it is entirely legal for an exempt employee to be required to work 7 days per week — and not unusual in some industries. No, there is no legal requirement under federal law that an exempt employee be given a day off during the week. The employee could be required to work 365 days per year. (A few states have laws that require one day off per week, but usually they do not apply to exempt employees.)
    There is also no presumption in many industries that if a day off is given, it will be a Saturday or Sunday. In fact, almost half of the US population works in jobs where Saturday and Sunday are normal work days, from police, firefighters and hospital employees to retail workers.
    In this economy, many employers are doing whatever they can to stay in business until the economy improves. Sometimes that means expecting more of exempt employee.

    This is probably a case of different expectations. You accepted the job with the impression that you would be off on most or all weekends. The employer made the job offer assuming that you would work most or all weekends. Sorry, wish we could be more helpful. Thanks for reading the blogs!~ Amelia

77. Posted by: Melissa

    If we are furloughing all employees for December 24 thorough the end of the year (last pay week of the month) are we required to pay them for Dec. 24 & 25 which were stated company holidays?

78. Posted by: Jose

    Haven’t read all the comments, but here’s a question: my sister works in Washington state as a “non-exempt salaried” employee (that designation doesn’t make much sense to me–she does get paid for overtime at 150% of her normal pay so I don’t know what “salaried” means there, but whatever). Anyway, the employer has a “paid time off” system that lumps sick days and vacation days together–the more you’re sick the fewer vacation days you have left. Recently, during the week of Thanksgiving, they had a furlough for the Monday, Tuesday and Wednesday, and they made employees use their limited PTO for those specific days (as opposed to letting them just take the days off without pay).
    Is that legal? I find it ridiculous if so, especially since sick days come out of their PTO as well in such a system. People are already not in control of when they get sick, and now they have to essentially take their vacation on the specific days the boss wants them to?

79. Posted by: Amelia

    Hi Melissa! You are not required to pay an exempt employee for a payroll week in which the exempt employee does no work at all. If you have a written policy that states you will pay employees for certain holidays, in many states you are legally obligated to do so, unless you have issued a policy change in writing. However, paying an exempt employee for Dec. 24 or Dec. 25 does not obligate you to pay them for the remainder of the payroll period.
    Before you decide not to pay employees for the holiday, we would suggest that you read A Christmas Carol by Charles Dickens. HTH, and thanks for reading the blogs!~ Amelia

80. Posted by: Amelia

    Hi Jose! Yes on both counts. Your sister is being paid appropriately as a salaried non-exempt employee, and the employer can dictate when an employee must use PTO or vacation. HTH, and thanks for reading the blogs!~ Amelia

81. Posted by: tony

    i am an exempt employee in Massachusetts i was just informed today 12/18 that in this pay period which is being paid on 12/23 that i will have 2 furlough days removed from my pay check, right before christmas. I will not be able to take time off to make up the none payment and all salaried employees have been asked for the past 6 months to work above the regular 40 work week.will i be able to get back pay for all the extra hours i have worked? My job also requires me to work at home during holidays, weekends and sick days can i collect for all this time also? from what i have read in the past posts it seems to me that this is illegal and i may be able to be classified as a non-exempt employee and ask for all overtime worked for the past 2 years. they did this last year to all exempt employees. i am just finding out that this is not legal. what steps should i take to file a complaint? am i correct in what i have stated? They did mention they might be able to pay us the 2 days salary in Q1 if things get better.

82. Posted by: Amelia

    Hi tony! Your employer seems confused about terms. A furlough is when an employee is required by the employer to take unpaid time off. If you work, it’s not a furlough. If you are just now being informed that you were “furloughed” for 2 days in the payroll period ending 12/18 (today) and you worked the full payroll period, then that is not a furlough. It is an illegal non-payment of wages. (Sorry, but we just have to vent: Attention, employers! “Furlough” is not secret code for “I don’t feel like paying you”!! Also, unless your last name is Scrooge, don’t spring this kind of nasty surprise on employees the payday before Christmas.)

    We will say that this portion of the FLSA applies to private businesses. It is lawful for state and local government agencies to impose furloughs, in some cases. However, they still need to inform the employees in advance, and actually give the employees the day off.

    As an exempt employee of a private business you are entitled to your full weekly salary if 1) you work any time at all during the payroll week and 2) you are ready, willing and able to work the entire week. So even if the employer told you to take two days off last week, and you did so you would be entitled to your full weekly salary if you worked any portion of the week. (Special rules apply when you are unavailable to work due to illness or personal business, but that is not the case here.)

    An employer can reduce an exempt employee’s salary, but the employee must be informed in advance, before working that payroll week. You were not so informed. We suggest that you file a wage complaint with the Massachusetts Attorney General, who enforces the wage laws in the state. (Link below.) It is far more likely that you (and every other exempt employee in the company) will be paid for the 2 “furlough” days than that you will be paid overtime.

    However, you are correct in your assessment. When an employee’s wages vary depending upon the number of hours worked, that employee is non-exempt. Even salaried non-exempt employees are entitled to overtime when working more than 40 hours per week. You can certainly file a complaint with the US Department of Labor that you are a non-exempt employee who is entitled to overtime for the past 2 or 3 years. We’re not saying that you will win, but it might be worth a shot. At the very least, it will clue the employer into the fact that they need to hire an HR pro. HTH, and thanks for reading the blogs!~ Amelia

    File a wage complaint at: http://www.mass.gov/?pageID=cagohomepage&L=1&L0=Home&sid=Cago

83. Posted by: tony

    thank you Amelia,

    I presented the issues with how what they were going about furloughing exempt employees for 2 days and not giving time off either may not be legal as you mentioned above.

    My manager presented this to HR and they said “oh we didn’t mean a furlough it is a temporary pay cut which is legal and that is what we did”.

    i have emails stating the furlough and we had a large meeting explaining this was a furlough for everyone. non-exempt were given schdules of the days they needed to take off and exempt employees were told our checks will be less x amount of money and you still need to work to cover the non-exempt employees.

    i also have another issue, i am the only exempt sales person on a staff of 12, i was not hired for this position but was asked to cover once one of the sales people was terminated, that was 6 months ago. i hold 2 positions now and i am treated differently than any of the other sales people is this some sort of discrimanation i am facing? asked to work more hours, weekends etc.

    also when i have complained about how many extra hours i have been working they have 2 giving me over time checks, doesn’t this alone change my exempt status?

    as i mentioned before i truly enjoyed working here till this moment and just wanted my pay and nothing more. i tried speaking directly about this and they did not want to discuss this. All i got was your luck you got a job.

    tony

84. Posted by: Amelia

    Hi tony! It is lawful for the employer to reduce an exempt employee’s salary, as long as the employee knows about this reduction in advance. Even one day’s advance notice will do. The company was incorrect in referring to this as a furlough, but that alone probably does not constitute an illegal action. It is completely lawful for them to expect exempt employees to cover the hours normally worked by hourly employees who are on furlough. Most companies have implemented these cost-saving measures in some form in the past 18 months.

    Ironically, with exempt employees, it is the reduction in hours worked, and not the reduction in salary, that is a problem.

    You are in a unique situation, but that is probably not illegal discrimination. If you were the only African American salesperson, and were paid less than everyone else, that would be illegal discrimination. But in this case it appears that there is a valid business reason for you to be treated differently. No one else is in the same position as you are, and that is the basis for your being treated differently. If you were not willing to agree to this treatment, you should have declined the additional duties when they were offered to you.

    However, if we understand your post correctly, you have been given 2 overtime checks. That would seem to make you a non-exempt employee under federal law. You have every right to file a wage complaint for overtime for the past 2 years with the U.S. Department of Labor at http://www.dol.gov.

    We have to agree with your employer on one thing — anyone who has a job in this economic climate is lucky. We would strongly suggest that you continue with your present duties and salary at this time. As the economy improves, you can look for a better job, or make demands of your current employer and risk being terminated. HTH, and thanks for reading the blogs!~ Amelia

85. Posted by: Elana

    Help,

    We are a temporary staffing agency and have a client that has requested we provide them with exempt employees that get paid hourly if they work less than 40 hours but be paid 40 hours regular pay and 10 hours regular pay if they work 50 hours in week. I have never heard of anything even similar to this. I can understand giving someone a “bonus” if they regularly work over 40 hours and they are exempt, however, I cannot understand paying them hourly if they work under 40.

    Thank you so much, Elana

86. Posted by: Amelia

    Hi Elana! If the employees you are supplying are certain computer professionals, this would be legal. The federal FLSA or Fair Labor Standards Act exempts certain computer professionals who earn at least $27.63 per hour from the overtime portion of the law. These employees are considered exempt, but paid an hourly wage. They must be paid for each hour worked, but are not entitled to overtime. (Also be aware that in some areas, state law would prevent this.)

    There is no similar provision for employees who are not computer professionals. If the employees your client is requesting are not computer pros, post another question. HTH, and thanks for reading the blogs!~ Amelia

    Read more about this at: http://www.dol.gov/whd/regs/compliance/fairpay/fs17e_computer.pdf

87. Posted by: Elana

    Amelia,

    Our employees ar not computer professionals, they are engineers and supervisors at a refinery. Can we pay them hourly if they work under 40 hours and then pay them straight time for all hours over 40 (per our client request), when the client is stating they are exempt?

    Thank you, Elana

88. Posted by: Amelia

    Hi Elana! You are 100% right — what the client is asking you to do is illegal. Your client is probably confusing the terms “exempt” and “salaried”. You are correct. In order to be exempt under the federal FLSA or Fair Labor Standards Act, an employee must be paid the same salary each week “regardless of the quantity or quality of work performed.” That means an exempt employee who works 25 hours in one payroll period must be paid his or her full weekly salary — the same salary as weeks during which that employee works 50 hours per week. Prorating the employee’s salary based on hours worked automatically makes the employee non-exempt, under federal law.

    There are additional criteria that an exempt employee must meet, including a test of primary job duties. Under the FLSA, only 5 classes of employees are exempt: Professionals, Executives, Administrators, Outside Sales and some Computer Pros. Your engineers are probably exempt Professionals. The supervisors may be exempt Executives, depending upon their primary job duties.

    However, there is no law that any employee — even in those 5 classes — must be treated as an exempt employee. An executive or outside salesperson could certainly be paid as a salaried non-exempt employee or as an hourly employee, for that matter. Salaried employees can be exempt or non-exempt. A non-exempt employee is paid a salary purely to make processing payroll easier. The non-exempt employee’s wages can be reduced when the employee works fewer than 40 hours in the payroll week. However, non-exempt salaried employees are entitled to overtime at 1.5 times the average hourly wage when they work more than 40 hours per week.

    Very simply, what the client is asking you to do is illegal, if your company is covered by the federal minimum wage and overtime law. (It might be lawful if these workers were independent contractors rather than employees. However, that status itself would be dubious at best. ) You should decline this arrangement and suggest instead that the employees be exempt, or salaried non-exempt, or hourly.

    We will say that we have noted a growing problem with staffing agencies in this regard. The client asks them to do things that are clear violations of employment laws. The client is basically saying, “I will pay you to break the law for me.” Obviously, that is not a viable long-term business model. HTH, and thanks for reading the blogs!~ Amelia

    Read more about this at: http://www.dol.gov/whd/regs/compliance/fairpay/fs17a_overview.pdf

89. Posted by: Louise

    Amelia,

    At my small office (20 people) we accrue PTO (paid time off) for every hour/week worked. We don’t accrue PTO while we are using it on vacation or on any type of disability leave. If my employer puts us on furlough for a week are we still able to accrue PTO time during the furlough?

    Thank you
    Sarah

90. Posted by: Amelia

    Hi Louise! No, there is no law that the employer must allow you to accrue PTO while you are on furlough. Normally, employees accrue PTO only when they work. An employee who is not working (for whatever reason) is not accruing PTO.

    There is no state or federal law that an employer must provide paid vacation or PTO to employees, so this is a matter of company policy, rather than state or federal law. However, 90% of employers would not allow workers to accrue PTO while on a furlough. HTH, and thanks for reading the blogs!~ Amelia

91. Posted by: Kristian Svindland

    I work as a consultant to small businesses looking for an HR solution. Oftentimes, we recommend the PEO model. Can a business owner, who is with a PEO, furlough themselves and collect unemployment insurance?

92. Posted by: Amelia

    Hi Kristian! As an HR consultant, you probably know that such a strategy would not be recommended.
    If the organization is set up so that the business owner is an employee, and paying unemployment taxes on himself, then if he is suddenly unemployed, he can collect unemployment benefits. (Usually business owners are not employees of the company, and are not paying unemployment tax premiums on themselves.)

    However, it would be fraud for the owner to file for unemployment benefits, but continue to work for the business. The two essential elements of the furlough or layoff are a) the employee receives no salary and b) the employee does no work. Simply reducing his or her own salary to zero (effectively working for free) does not qualify a business owner to collect unemployment benefits. That is not a layoff or furlough — it is a salary reduction. Filing for unemployment under those circumstances would be fraud in every state. The business owner must not be operating the business, and must be actively looking for a full-time job.

    The issue becomes even more complex if the agreement between the PEO and client is structured so the business owner is actually an employee of the PEO. In that case, if the owner continues to work, the PEO has violated the federal (and possibly state) minimum wage law. Obviously, you would not want to encourage that. HTH, and thanks for reading the blogs!~ Amelia

93. Posted by: Michael

    I have a question about hourly exempt employees. If they are furloughed for one day during a pay period, how does that affect them?

94. Posted by: Amelia

    Hi Michael! There is no such thing as an hourly exempt employee. Under federal law, an employee is either exempt or non-exempt. A salaried employee can be either exempt or non-exempt. An hourly employee is always non-exempt. Simply by paying the employee by the hour, the employer switches the employee to non-exempt status.

    There is never a requirement for an hourly employee to be paid when they are furloughed for a full work day. The employee must merely be paid for the hours that he or she works. Feel free to post another question if you need more specific information. HTH, and thanks for reading the blogs!~Amelia

95. Posted by: Rich

    The company I work for has required all employees to take 10 furlough days, between February 1st and June 1st.

    They gave us the choice of taking full weeks or consecutive days each week (for example: every Monday for 10 weeks). I am an exempt employee and have chosen to take 5 consecutive Mondays in March and 5 consecutive Fridays in April and May. Sounds like this may not be legal?

96. Posted by: Amelia

    Hi Rich! If you are an exempt employee working for a private business and are not being paid for the furlough days, this is probably not legal. You should file a wage claim with the state or federal department of labor.

    It is legal for the employer to require workers to take one or more full weeks off. As long as the exempt employee does no work at all during the payroll week, he or she need not be paid for that day. However, if the employer has told you that you must take one day off for 10 weeks, then usually you must be paid for those days. We assume that you are covered by the federal FLSA. HTH, and thanks for reading the blogs! Amelia