More hours, less money, why not?

May 8, 2009 7:02 AM

Is it legal and ethical for a company to require salaried employees to work "as many hours as it takes" to complete their work so that the employees are off (paid or unpaid) for one or more weeks per month?

My spouse works for a manufacturing company in the state of Texas. Due to the current terrible economic conditions, the company has laid off a substantial portion of the direct workforce, and some smaller percentage of the indirect salaried workforce. Even with those reductions, they still need to reduce expenses. As a result management has instituted site shutdowns of 1-2 weeks per month. For the first couple of shutdowns most people had vacation time they could use to cover the time off. Now my spouse is running out.

In some cases the indirect salaried workforce are being asked to work substantial extra time (20-30 extra hours per week beyond what they would normally work with no overtime as the group in question is salaried) in order to complete their work in the "on weeks" so that the company can carefully ensure that they do no work at all during the "off weeks" and therefore not pay them for those weeks if they have run out of vacation. The company has explained that this is being done to try to prevent additional layoffs, and therefore the employees should all pull together to make it through.

To me it feels unethical, and I wonder if it is legal. Is it? If not, how should my spouse proceed?

posted by anonymous to work & money (14 comments total)

Is she getting reduced or no pay during the off weeks? If so then she is not by definition 'salaried' anymore, and she may have a case. I've also heard of non-management salaried positions being illegal, but I can't remember the case.
posted by Gungho at 7:23 AM on May 8

Is your spouse exempt or non-exempt from the provisions of the Fair Labor Standards Act?

If exempt, it is completely legal.

If not exempt, it is completely illegal (overtime must be paid).

Standard warnings apply - regardless of the legality of the situation, making a fuss about it might just get you laid off anyway.
posted by saeculorum at 7:24 AM on May 8

I'm not a lawyer, but according to this blog it's legal. As saeculorum said, your spouse has to be exempt, otherwise overtime must be paid.
posted by burnmp3s at 7:29 AM on May 8

Salaried is basically a synonym for exempt.
posted by smackfu at 7:32 AM on May 8 [1 favorite has favorites]

I'm pretty sure it's legal. GM and Chrysler did this, and I've heard of HP doing this.

Since you are in Texas, the odds are extremely slim that your spouse belongs to a union. However, if your spouse is a union member, then talk with the union representative.

Also, your spouse can apply for unemployment insurance. Number 2 on this list gives qualifying reasons. The second example is, "You are still working but the employer reduced your hours. (Your reduction in hours must not be the result of a disciplinary action.)"
posted by Houstonian at 7:32 AM on May 8 [1 favorite has favorites]

Are the salaried employees are exempt? That's the first big question to answer, cause your explanation is confusing (you mention "overtime").

Although it sounds like they are in a gray area legally (and certainly ethically), exempt employees can, more or less, work "as many hours as it takes" to get the work done.

If your spouse wants to find out more just call your state Wage & Hour division of the Dept of Labor and explain the circumstances.
posted by RajahKing at 7:40 AM on May 8 [1 favorite has favorites]

So effectively, your spouse is a salaried employee, and is being "offered" what is effectively a 25-50% paycut? Because the same amount of work is being done, just in a shorter amount of time.
posted by misterbrandt at 7:52 AM on May 8

I would advise your spouse to update her resume and start discreetly looking for new employment. While the company actions may be legal (according to previous posts), this sounds like a horrible working situation. The forced furlough is going to decrease your income and doesn't speak well about the future security for your spouse and the company itself.
posted by seppyk at 9:13 AM on May 8 [1 favorite has favorites]

So they're salaried, but they have involuntary, unpaid time off. That doesn't sound like "salary" to me, but I'm not an employment lawyer.
posted by Optimus Chyme at 9:16 AM on May 8

Optimus brings up a good point - its not logical, but it is legal for companies to put salaried employees on unpaid time off - they call it LOA or "furlough".
posted by RajahKing at 9:21 AM on May 8

Salaried is basically a synonym for exempt.

It's not, though. In my last three jobs, I've been classified as non-exempt, and even though I'm salaried, I'm still eligible for overtime. Employers may try to muddy the waters of your classification; your spouse may be wrongly classified (intentionally or un-), and should really call the Wage and Hour board.
posted by rtha at 9:25 AM on May 8 [1 favorite has favorites]

Mandatory Furloughs 0f Exempt Employees

Full Work Week Furloughs

Furloughs of nonexempt employees are fairly straightforward, but with exempt employees furloughs are anything but straightforward. Furloughs that result in the exempt employee being paid less than his/her full weekly salary may jeopardize the exempt status. The December 2008 Insight discussed furloughing exempt employees for entire workweeks, which would not jeopardize their exempt status because no pay is due to exempt employees who perform no work during an entire workweek. According to the DOL's recent pronouncements, this approach remains viable.1

In addition, if the employer mandates furloughs, but requires exempt employees to use accrued vacation or "paid time off" for those furloughed days, the DOL agrees that the employer does not jeopardize the exempt status of these employees. The reason for this result: the exempt employees still receive their full salaries for the workweek, even if they only worked a small portion of that workweek.

Extracted from the following Word Doc:
An Update on Furloughs and Reduced Hours: New Guidance on Cost
posted by crenquis at 11:08 AM on May 8

Salaries ≠ exempt. I find it hard to imagine a person doing 70 hours of all exempt work at a manufacturing plant. It really depends on what kind of work he's doing. If all the work he's doing is either executive, professional (i.e. CPA or lawyer), or administrative (meaning managerial) work, then he's exempt from overtime.
posted by jabberjaw at 11:11 AM on May 8

Even when salaried does equal exempt, exempt employees are entitled to basic labor law protections. This company sounds like it's trying very hard to skirt them as closely as possible. Check with an actual labor lawyer in Texas - this is going to be in the details. In some states companies have to report this kind of across the board wage cut. (Texas may not be one of them, and this may not be successfully prosecutable.)

Alternately, they're intentionally or unintentionally trying to lose staff by making the wage vs job demands impossible, as seppyk suggests, and have little idea of whether they are following the rules or not.
posted by nckd at 1:56 PM on May 8