A CAUTIONARY NOTE TO EMPLOYERS CONSIDERING MANDATORY DAYS OFF
Many employers are considering cost-saving measures to cope with current economic issues. To avoid laying off valuable employees, employers are considering furlough programs, mandatory time off with the use of PTO, or even mandatory days off without pay.
Mandatory time off could cause exempt employees to lose their exempt status under the Fair Labor Standards Act (FLSA). Under the FLSA, exempt employees must be paid on a “salary basis,” which means, with some exceptions, that such employees’ weekly compensation cannot fluctuate based on the amount of time worked.
Under the FLSA an employer cannot reduce an exempt employee’s weekly salary because of a required day off but may require the employee to take a full week off without pay. An employer may also reduce an employee’s pay to achieve the necessary cost savings, dependent, of course, on the terms of any agreement with that employee.
The FLSA would permit requiring an employee to use accrued PTO for mandatory days off. Such a requirement might, however, be prohibited under an employer’s PTO policy or a collective bargaining agreement (CBA).
Before implementing a furlough program, cost-cutting measure or any type of hours reduction, employers should consult with legal counsel to ensure their program complies with their established employment policies, FLSA requirements and any relevant CBA.
If you have any questions about the content of this alert, please contact a member of Oppenheimer’s Employee Benefits or Labor & Employment Group.
This alert is a copyrighted publication produced by Oppenheimer Wolff & Donnelly LLP. The information contained in this alert is of a general nature and is subject to change. Readers should not act without further inquiry and/or consultation with legal counsel.