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.
The US DOL stated that requiring those employees to take time off without pay was unlawful. Specifically, the opinion letter stated that “[i]t is our opinion that salary reductions due to a reduction of hours worked for short term business needs do not comply with [wage and hour regulations] because they result from operating requirements of the business. Thus, if the employee is ready, willing and able to work, deductions my not be made for time when work is not available.” The DOL noted that these unlawful deductions, which were the result of unpredictable, short term changes in availability of work, as opposed to a permanent shift change in an exempt employees’ regular work week and corresponding change in salary. The DOL has stated, in certain circumstances, that an employer may require an exempt employee to take an entire workweek off due to lack of work and not pay the employee for that week. The DOL has stated that it is legal for an employer to require an exempt employee to use accrued leave when they are furloughed provided that there is no reduction in compensation for the week. An employee’s exempt status can be jeopardized when the employer makes a deduction from the employee’s salary for partial week absences occasioned by lack of work.
Employees who are subject to a furlough and believe that their salary may be getting cut unfairly should immediately seek advice from experienced counsel. Our New York Employment Law attorneys know the intricacies of lawful furloughs and call protect your rights. Call now to speak with one of our New York Workers Compensation Defense Attorneys at (800) 893-9645.
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