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May 07, 2009
Employers Continue to Grapple with Layoffs
Lots of BLR subscribers continue to struggle in this economy, and our legal experts aren’t at all surprised to be getting questions about layoffs and other ways employers may be able to save on the costs of labor. Here’s a sampling of what we’ve received lately.

Q.We’re considering “laying off” some employees without pay for one week each month, or perhaps one week each quarter. Is it legal for us to do that for exempt employees?

A. In general, exempt employees must be paid at least $455 every week, regardless of how much or little they work in any given week (and some states require a higher minimum salary). So you can’t dock an exempt employee’s pay for part of a week and still maintain his or her exempt status. That said, however, the Fair Labor Standards Act does allow employers to dock exempt employees’ pay for a full week, as long as the employees did no work at all during that week. (We’d add that asking them to stay in touch by phone or e-mail would be a mistake.)

Q.My company just laid off 21 employees, one of whom was out on short-term disability leave. Was that layoff discriminatory?

A. The key question to answer is whether the employee would have been selected for layoff if he or she had not been out on disability leave. HR should document the strictly job-related reasons for the selection. Also be cautious if that employee was the only one in a particular location, especially if others in similar jobs were not laid off.

Q.We selected an employee to be included in our second round of layoffs, but just before we conducted the force reduction, he slipped and broke his back. So he’s now out on short-term disability leave. We’re delaying the layoffs, but what happens if we eliminate all the identified positions, including his, when his leave is over?

A. The answer to this question is the same as the one given to the previous query: If you selected him without regard for his disability leave, and you document why, you can proceed.

Q. In addition to laying off some employees entirely, we have changed some from regular full time to temporary/on-call status. Now top management would like to reduce the pay of those people commensurate with their fewer hours. Can we do that without changing their jobs or titles?

A. You can lower the pay of some or all employees if you do so in a nondiscriminatory manner. Here are some other cautions: Be careful not to lower anyone’s rate of pay below minimum wage. Observe the national or state minimum weekly salary if you wish to maintain employees as exempt. And watch out for on-call time: If it so restricts employees that they cannot use it effectively for personal purposes, then they must be compensated for all hours during which that was the case.

Simply carrying a communications tool—such as a cell phone, pager, or texting device—in order to be contacted if necessary doesn’t usually qualify as hours worked for purposes of compensation. But avoid requiring on-call employees to check in frequently.

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