Furloughs and Exempt Employee Pay

Document created by 1050210 on Nov 13, 2014
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Published Date: 08/04/2014

 

George; Ports

By George Ports

 

CAI is still receiving some calls from members regarding measures to reduce payroll costs including reductions in force, wage and salary reductions, workweek reductions, job sharing and periods of temporary “shutdowns” or “furloughs.”

 

Questions are often asked regarding exempt pay, including the use of vacation/PTO during temporary shutdowns. The USDOL Wage and Hour Division has no jurisdiction over an employer’s ability to require or allow exempt employees to use available vacation/PTO or to bank it for future use. In other words, it is up to the employer. Whatever the employer’s policy regarding this issue is, it should be clearly communicated to exempt employees, preferably in writing.

 

The USDOL Wage and Hour Division does have jurisdiction over what deductions are allowed from an exempt employee’s pay without damaging the exemption status. Allowed deductions include:

 

  • An entire workweek during which the exempt employee performs no work (If an exempt employee performs any work during the week such as responding to voice mails or e-mails, deductions are not allowed).
  • Absences of one or more full days for personal reasons.
  • Absences of one or more full days due to sickness or disability, if the employer has a bona fide sick pay plan.
  • Suspensions of one or more full days for infractions of workplace conduct rules that are of major significance.

 

For more information regarding allowed deductions from an exempt employee’s pay, go to http://j.mp/ot-flsa or contact a member of CAI's Advice & Resolution Team at 919‑878‑9222 or 336‑668‑7746.

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