If state law requires a higher minimum salary for exempt employees, you cannot reduce an exempt employee’s salary below that minimum. The employer can seek volunteers to take time off due to insufficient work. In such a case, the employee would be paid as a non-exempt employee. Job form required to reduce FTE of 80 hours The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work. The employer can't put an employee on salary to evade overtime laws. https://employersresource.com/wp-content/uploads/2017/09/HR_Scenario_Reductions_to_an_Exempt_Employee_s_Salary_featured.png, https://employersresource.com/wp-content/uploads/2020/07/Employers-Resource-Logo.png, Reductions to an Exempt Employee's Salary. For example, during a business or economic slowdown, provided the change is bona fide and not used as an attempt to evade the salary basis requirements. Michael (Mike) D. Haberman, SPHR is a consultant, speaker, writer of HR Observations, and co-founder of Omega HR Solutions, Inc. After over 30 years in HR he got tired of the past and focuses here on the Future of HR. Exempt employees must receive a salary of at least $455 per week. In each of these articles, Kim will walk you through a real-life HR scenario and break down how this situation should be handled and all the ins and outs of the rules and regulations that impact the scenario. Exempt employee mandated salary reduction California 12-15-2008, 03:48 PM. Deductions from pay are permissible with an exempt employee is absent from work for one or more full days for personal reasons. An employer may not reduce the employee’s salary for partial days of work. Site Design by The Spinbird Group. The circumstances when deductions to exempt employee’s salaries are permissible include the first and last weeks of employment when the employees do not work the full workweek. This is provided that the employee still receives payment equal to the employee’s predetermined salary in any week in which any work is performed even if the employee has no leave remaining. Such an employee must then be paid at least the federal minimum wage and overtime pay required by the FLSA, as discussed in FAQ #2 above. However, there is no requirement that the predetermined salary be paid if the employee performs no work for an entire workweek. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work. © 2021, Employers Resource Management, Call Us Toll-Free At (800) 574-4668, Natural Disasters & Employers’ Pay Requirements. If the exempt employee volunteers to take the day(s) off for personal reasons (other than sickness or disability), salary deductions may be made for one or more full days of missed work. Issue #7) Can an employer reduce an exempt employee’s salary during a leave of absence? 1  If the employee is 10 hours short during each pay period, that means that they have taken more than 80 hours off from work. In order for the exempt employee’s salary reduction to be defensible, it should be: Permanent; Applied to an entire group or class of employees; Not directly tied to a reduction in hours If an employer temporarily reduces an exempt employee’s salary when … Necessary cookies are absolutely essential for the website to function properly. If the employee is ready, willing, and able to work, deductions may not be made for time when work is not available. The most common reason for a salary reduction is when an employee is demoted at work. Yes, the salary can be reduced if the position still meets all the conditions for the particular exemption, including being paid a minimum weekly salary of $455. Can an employer adjust the employee’s salary down to compensate for the reduced hours? An exempt employee’s salary can be offset by the amount the exempt employee received as jury or witness fees, or on temporary military duty. The Fair Labor Standards Act (FLSA) allows reductions in employees’ salaries as long as the reductions are not designed to circumvent the salary basis requirement. This article is part of our ongoing HR Scenario series by our National HR Client Service Manager, Kim Schaff, SHRM-SCP, PHR. The employee must then be paid minimum wage and overtime required by the FLSA. How to Reduce the Salary of Exempt Level Employees, ← 4 Easy & Effective Team Building Strategies, Curiouser and Curiouser | HR Examiner with John Sumser. Labor Commissioner Approves Temporary Salary Reduction for Furloughed Exempt Employees By Labor & Employment on September 1st, 2009 Posted in Wage & Hour. For example, to qualify for exempt status, an administrative employee must receive a minimum salary of $455 per week. Employees must be paid a predetermined and fixed salary … You may require the employee to use accrued paid time off or vacation time for this absence (in any increment but courts have endorsed 4-hour or longer increments), but absent a policy or accrued and available time off, you may not reduce an exempt employee’s pay on a day in which any work was performed. Receive a salary of $ 455 per week or at least $ 27.63 per Hour on job duties and criteria. Exempt employees under California law that are paid more than $ 23,600 per ( 455. # 3 above save my name, email, and website in this case must still receive a of! Lack of skills, or less frequent, basis to week consistent with the reduction! A short-term salary deduction © 2021, employers can reduce salary basis ” because of variations in the predetermined each... 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