Beware of Wage and Hour Law Violations during Coronavirus Shutdown
Many employers are affected by the coronavirus outbreak. Before you choose to reduce hours or pay for your employees, you must consider all relevant federal and state laws.
With the coronavirus spreading across the globe, many companies are faced with economic concerns. Employees are being asked to work from home. People have been told to suspend all non-essential activities and events are being cancelled.
To mitigate health and/or economic concerns, some employers be considering temporary furloughs, hour reductions, or reduced pay. On the other hand, some employers may be finding that their products and services are in greater demand, facing challenges with an increase in hours worked. Such changes may have potential wage and hour law implications that employers should consider before they implement any.
Non-exempt employees can be paid only for the time when they are working. Employers may be able to reduce hours or hourly pay without wage and hour law implications and changes to pay rates must be prospective.
However, federal and state minimum wage requirements must still be fulfilled. If you’ve decided to reduce pay due to the economic impact, it is important to check state law requirements about notification of pay rate changes. And of course, you must continue paying workers on time. That said, it is best to check with a wage and hour or employment law attorney to ensure that any changes you are implementing do not violate any federal or state laws.
Exempt employees are subject to the salary basis test. So, they must be paid the same minimum weekly salary regardless of how many or few hours they work each week. If you fail to pay theexempt employee’s full weekly salary, it could affect the employee’s exempt status and make them eligible for overtime pay.
An employer can enforce a full-workweek furlough (or require an employee to take a full workweek off) and not pay the weekly salary, but only when the exempt employees does not perform any work during the week. Employers that choose this option must make sure that furloughed employees are not connected to the workplace at all and do not respond to any emails, not take any phone calls, or otherwise workin any way till their return.
Exempt employees, who perform any work at all, must be paid for the full week, and it may be difficult to completely prohibit all work by an exempt employee during a workweek. However, employers can meet the salary requirement with payment of vacation time for time that the employee does not work during the workweek. Accordingly, employers can mitigate risk by requiring that furloughed employees use accrued vacation time for non-worked time during the workweek (and paying regular salary for time actually worked), rather than treating the furlough as unpaid.
Generally, you can’t make partial-week reductions in salary because it will be a violation of the salary basis test. For example, you cannot pay an exempt employee 80% of their salary for working four-day workweeks, rather than five, at the employer’s request.
Remember that when dealing with any of the above or related issues, it is best to consult an experienced wage and hour lawyer.
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