Furloughs Announced by New York State
UPDATE: May 12, 2010: As expected, several unions representing New York State employees filed court challenges to the legality of the furloughs. U.S. District Court Judge Lawrence Kahn temporarily has blocked Governor Patterson from imposing furloughs on about 100,000 state workers.
Following in the paths of the auto industry and many other businesses, New York Governor Paterson has announced he will include one furlough day per week for most executive branch state employees. Affected state employees will not report to work on their designated furlough day and will not be paid for that day. Affected employees will not be allowed to use their paid-time off to offset the salary reduction, and state agencies are prohibited from using overtime to make up for the loss of productivity. In this recession, more and more employers are considering furloughs as a method of saving money. However, if an employer does not properly effectuate a furlough, it can have disastrous consequences and convert exempt employees under the Fair Labor Standards Act and State Labor Law into non-exempt employees under the FLSA and State Labor Law.
The issue of furloughs can be a minefield for employees and employers. At the outset, it is difficult for the employees as their salary will get cut yet none of their expenses will get proportionately cut. For guidance, the Department of Labor has issued several opinion letters on this topic but, it is important to remember, that the opinion letters only address issues under the FLSA and not applicable state laws. In one opinion letter, the United States Department of Labor's Wage and Hour Division cautioned an employer who sought to reduce the salaries of exempt employees because it did not have enough work and offered to allow select employees to use paid-time off and not report to work.
