More companies opt for mandatory vacation, but is it legal? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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More companies opt for mandatory vacation, but is it legal?

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Continuing a cost-cutting step they took last year, some companies, especially tech firms, are again asking employees to take mandatory vacations.

The forced time off, paid or not, is catching on as a way to reduce costs, and as an alternative to layoffs. Hewlett-Packard, for example, shut down the first week of July, requiring employees to go without pay or use up accrued vacation time. Sun Microsystems and Compaq also planned to close for a week this summer.

But are these measures legal? Yes. As long as there's no collective bargaining agreement, employers have the power to set their work schedule and designate short workweeks or temporary shutdowns.

"If companies are doing it as a policy with all of their employees, then it's OK," says Baldwin Lee, co-chair of the employment practice group of Farella Braun & Martel LLP in San Francisco.

Finally, set reasonable time limits on any shutdowns, say, a week at a time.

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