An employer has the right to lower an employee's hours as it sees fit within the parameters of the law. An employer may elect to provide an employee with some notice regarding a reduction in hours but the law does not expressly require it. The law does require an employee receive some notice of reduced hours when the reduction may cause him to lose benefits guaranteed to full-time workers.
According to the National Federation of Independent Business, if a worker is paid hourly, no notice is required if his employer wishes to reduce his hours from full-time to part-time status. The employer is still required to pay the worker at least the federally guaranteed minimum wage or state minimum wage for hours worked -- whichever is higher. An employee has very little recourse under these circumstances other than to inquire how long the lower amount of hours is expected to last or if the move is permanent.
As of January 2011, a salaried employee may have her hours reduced without notice from her employer as long as her weekly rate of pay does not drop below $455. If the state requires a higher minimum weekly rate for a salaried employee, then the higher rate applies. If the employee's weekly rate of pay drops below this mark she may no longer be considered an exempt employee and must be paid hourly for work performed. This may allow the worker to fall under all normal laws for hourly workers, including overtime pay rates.
In some states, if an employee reduces the hours of a full-time employee and significantly impacts his income, the employee may be eligible for unemployment benefits. This is because the worker's pay was reduced through no fault of his own and he is effectively partly unemployed because he may be forced to find new employment to make up for his lost hours. An employer is required to pay part of an employee's unemployment benefits, which may offset any financial gains from lowering employee hours.
Employee Benefits and Discrimination
Lowering a full-time employee's hours without notice may have larger implications for the employee's company benefits, like health insurance. If fewer employees participate in a health plan, it could drive costs up for the rest of the employees participating in the plan. This could hurt the finances of every benefits-eligible employee at the company. If an employee is going to experience a reduction in benefits or lose them altogether, the employer is required to give the employee prior notice. Additionally, an employer must be very careful when selecting an employee for an hours reduction. If the employee can show her hours were reduced for reasons such as a gender, disability, race, marital status or religion, the business may be open to a potentially large civil lawsuit.
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