There are many strategies employers use in times of financial stress to try to save money and stay afloat. Most employers leave layoffs and firing as the last resort because it is hard on employees and a taxing process for the company. They may try furloughs, which may involve requiring employees to take a day off every week, two weeks, or month. Some companies also try cutting back on employee hours in an effort to save money without firing anyone.
To many employees, though, it is an unfair and frustrating action that may not even seem legal. Below we examine the different employee situations that determine the legal implications it has on an employee’s status.
Whether your employer can cut your hours depends on your exemption status, which companies base on how they pay you. A nonexempt worker is someone paid hourly, and can legally receive overtime if he or she works more than 40 hours in a week. An exempt employee has a salary and receives the same amount of pay each week no matter how many hours he or she works.
As a nonexempt employee, your employer is legally allowed to cut your hours. However, some employers give workers the same workload, while cutting their work hours. If you are a nonexempt employee you still have the right to receive wages for any hours you work. Your employer cannot give you the same workload and expect you to finish it in fewer hours. Even if your employer allotted fewer work hours, you have the right to payment for all your time worked, regardless if your employer allotted for that time.
Along with cut hours, some employers cut employees’ pay. It is legal for employers to cut the pay of nonexempt employees, as long as the hourly pay remains above minimum wage.
The usual wage and hour laws do not apply to exempt, also referred to as salaried, employees. They cannot receive overtime if they perform a certain type of work, much of which is work that requires an advanced degree or is upper level in some sense. If your pay is on a salary basis, you will get the same amount each week, no matter how many hours you work. An exemption from minimum wage and overtime pay exists for salaried employees making at least $455 per week.
If your employer does not pay you your full salary for each week you work, you will become an hourly employee. Most employers want to avoid turning salaried employees into hourly workers because it requires them to pay the employee overtime, which can become more costly.
If you are a salaried worker and your employer cuts your hours, there is no legal issue, because you are still earning the same amount of money. The only situation that would warrant legal action is if your employer cuts your hours and changes your salary.
If your employer cuts your hours along with your pay, your employer will need to pay you overtime for any extra hours you work. Two circumstances that can lead to you becoming a nonexempt employee include: your weekly pay becomes lower than $455, and your employer reduces your hours on a day-to-day or week-to-week basis.
However, the Federal Department of Labor made an exception for employers looking to cut the pay of exempt employees: Employers can cut the pay of salaried employees while keeping them exempt if it is in the best interest for the future of the business. For example, your employer could cut your pay if it is deemed necessary to adjust to economic hardships.
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