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Exempt employees and a reduced workweek

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in Compensation and Benefits,Human Resources,Office Management,Payroll Management

Q. During our slow season, we would like to require employees to work just four days per week in order save on labor costs. Can we require exempt employees to participate?

A. To qualify as exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA), executive, administrative and professional employees must have the requisite job duties and must be paid on a “salary basis.” Under the FLSA regulations, employees are not being paid on a salary basis if they are subject to deductions from predetermined compensation because of absences caused by the employer’s operating requirements.

Thus if an exempt employee is ready, willing and able to work, you cannot make deductions for time when work is unavailable.

While you cannot require exempt employees to participate and take a pay cut, it may be useful to include them in this program to reduce the amount of their accrued vacation or paid time off (PTO). As long as doing so would not run afoul of your vacation/PTO policy—and as long as you don’t dock pay from those who have exhausted all of their accrued vacation/PTO benefits—you could require that exempt employees treat the day off per week as vacation/PTO time.

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