Are we allowed to cut full-time employees’ hours to meet budget requirements? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Are we allowed to cut full-time employees’ hours to meet budget requirements?

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Q. Can we legally reduce the hours of full-time employees in one of our divisions because it needs to cut overhead?

A.
Yes, if you do it prospectively. You can always reduce the hours of nonexempt employees. Exempt employees, however, are supposed to be paid the same salary each week regardless of how many hours they work, pursuant to the “salary basis” requirement.

However, the U.S. Department of Labor has approved a practice in which an employer reduces an exempt employee’s workweek as a result of economic conditions and implements a fixed reduction in salary to match the lower hours. The DOL frowns on changing the workweek back and forth to avoid the salary basis requirement.

 

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