Hello, first let me say I am new to this site and look forward to conversing with other people in my field as well as many others.  I do come with a question to get things started.  First I will give you the background.  My cousin is a manager for a local retail store and she is paid salary and works Monday-Friday.  A few months ago, they told her that her salary would be cut 20%, however as a sign of good faith her days would also be cut to Monday-Thursday.  Recently she was made aware that she would not be paid for Memorial Day despite it being a company paid holiday.  The arguement that her boss gave was as follows:  All salaried people are now being paid according to a 4 day work week and therefore will be paid for only 4 days of work but are required to work, in this case, Tuesday-Friday.  However they were paid for the Good Friday holiday but her boss states that was ana error and the company risks losing non-exempt status.  So what it boils down to is her paycheck will show she was paid for the holiday but still only a 4 day paycheck.  At first I thought that was logical, then I had concerns.  The company is still requiring her to physically be at work for 4 days and essentially saying she will not be paid for the holiday.  Am I wrong in thinking that all of those salaried people should be paid?  Also what does she mean they will lose non-exempt status?  Isn't company decision to pay holidays?  I didn't have enough knowledge to answer this on my own so I figured I would find a group of pros, here we are.  Any advice you guys can offer would be very appreciated.  I don't think she can change anything but I would like to know the answer.

Hi There!

In your post, you stated that your cousin's days of work were cut from a 5-day week to a 4-day week and that her salary would be cut by 20%. My question to you, here, is if your cousin was an exempt or non-exempt employee before the cut, and did her status change after the cut. An employer does not risk "losing" exemption status. However, an employee does, depending on the DoL tests for each category of exemption status.

As far as the holiday concern, if she is considered non-exempt (exempt if there is a supplemental contract), the employer is not required to pay for any holiday the office (or place of business) is closed. If the employer moved the working days from Tuesday - Friday, from Monday - Thursday, he/she is still not legally bound to pay her holiday pay.  Salary does not preclude an employer's willingness to pay holidays. An exempt employee will be paid whatever the pay-cycle set amount is based on a per-annum value. A non-exempt employee should be paid a calculated hourly amount based on a per-annum value only for hours worked. If the employer figures in to that schedule holiday pay that's great, but he/she is not required by law to do so.

 

Hope this helps!

Cheers!

sreising 

 

Thank you, I think it helps.  She has been exempt since day one.  So  I guess this just boils down to a moral thing in my mind.  If the company is making her work her 4 days and receive a 4 day pay I guess it just seems wrong.  Thank you for your help.

Remember that exempt status means that you don't get paid overtime.  If the job takes you longer than your "normal" work schedule to complete, then you still get the same set amount of pay as you always do.  For example, if someone normally works M-F and is working on a big project for a customer that is due the next Monday, but it isn't finished on Friday so the employer says the team needs to work all weekend to finish the project, that is within the right of the employer.  You may have upset employees because they had other plans, but there is no additional pay that is required from the employer. 

So in this case given by the original poster, the employer is basically saying you normally work M-Thur but because of the holiday we need you to work Tu-Fri to get the job done and take care of our customers.  No additional pay is required of the employer to the employee. 

IT HR is correct, in my opinion. Since you stated in your second post that the cut in pay and hours did not affect her exemption status, the employer is not legally bound to pay any more than what the salary says to pay. Even in the case of a non-exempt employee, holiday pay is at the employer's discretion...Employees only must be paid for the time worked, and if that time is over 40 hours, then the employer must pay overtime in accordance to the FLSA. Exempt employees do not qualify for overtime pay, but may qualify for compensatory time, if the employer allows for such.

Absent a CBA or other agreement to the contrary, setting schedules is at the whim of the employer.  If an employee is on a 4 day work week, that work week can be any 4 days and they can be moved around across holidays at the employer's sole discretion.

That being said, I don't think it's ever wise to make a salary adjustment so clearly tied to time.  Exempt status and challenges to it generally never rest on any one thing.  A challenge to the salary basis of pay is one of the things that can be used to argue against exempt status.  One way you can challenge the salary basis of pay is by demonstrating the employer's intent to pay by time worked in a way that favors the employer only.  For example, the employer enjoyed the benefit of never paying overtime while the employee was on a salary basis and (probably) often working over 40 hours and the employer wants the benefit of reduced pay when schedules are reduced.  This has been discussed in other threads and, in the end, some sense of "permanence" of the reduction will play in favor of the employer.  I wouldn't try to make the challenge on the basis of the time, alone, but if an examination of her responsibilities against the duties' tests is marginal, then it would be worth a phone call to the DOL on a day off.