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  #1  
Unread 02-13-2003, 02:57 AM
Sandy Betz
 
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Default Exempt Employees Pay during plant shutdown

We will institute a forced plant shutdown while we re-organize to file for bankruptcy or liquidation. Can we lay off salaried exempt employees during this time period? The bank says we need to cut all indirect labor immediately, but from what I know of labor laws, we can't. We are planning on the layoff starting Friday, 2/14 and continue through 2/19. Does anyone have any experience in this area?
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  #2  
Unread 02-13-2003, 11:21 AM
Hatchetman
 
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Default RE: Exempt Employees Pay during plant shutdown

FLSA regulation on exempt status employees -- 29CFR541.118(a)(1) --provides:

"an employee will not be considered to be 'on a salary basis'if deductions from his predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. Accordingly, if the employee is ready, willing, and able to work, deductions may not be made for time when work is not available."

This in essence means that you must pay the employee his or her salary for the week if he or she works any part of the week (except as the FLSA regulations allow docking salary for full days' absences for specified reasons) and that closing down for any part of the week doesn't permit docking salary without loss of the exempt status (changing the emplyee to non-exempt).

If you're going to close down for a week, why not have it start on Sunday/Monday and end on Friday/Saturday, rather than Friday through Wednesday. That way, the exempts won't have to be paid for the week, unless they work on the Sunday or the Saturday of that week.

There is some possibility, however, that you could charge the exempt employee's accrued time balance for the hours that are not worked due to the shutdown. But you would still have to pay their full salary, even if they didn't have enough hours or any hours to cover the shutdown period. Before doing that, however, discuss the matter with legal counsel. It can get tricky in light of certain court rulings and possible state law.

Check some other posts on this BB or the "HR and Employment Law Conference" BB. There have been several threads about this very issue.
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