Federal Labor Laws: Can an Employer Cut Hours Under 40 for Salaried Non-Exempt Employees?

The Fair Labor Standards Act, or FLSA, is the federal labor law that governs minimum wage, overtime, recordkeeping and child labor regulations in the U.S. The act also sets the standards for which a salaried employee is exempt from its overtime pay criteria; salaried employees who do not meet the requirements are nonexempt. An employer can require a salaried employee to work a certain amount of hours for the week, and in some cases, can reduce the required hours.

Identification

An employee's salary is an amount the employer agrees to pay her each payday; this amount can be based on her total work hours for the week or it can be a fixed amount. An employer cannot pay an exempt-salaried employee less than $455 per week in salary. He cannot pay a nonexempt-salaried employee less than the federal minimum hourly wage of $7.25, at the time of publication.

Determination

An employer can make a nonexempt, salaried worker's pay contingent on him working a certain amount of hours for the week, such as 40 or 35. As long as the employee's pay does not fall below the required federal minimum hourly wage, the employer can reduce hours under 40 if the employee's work hours permanently change, such as from 35 to 30 per week; or during an economic decline, which causes a slowdown in business. The employer can pay a fixed salary, which applies regardless of days or hours worked, or he can place the employee on a fluctuating workweek plan if his weekly hours tend to vary.

Fluctuating Workweek

A fluctuating workweek plan requires an employer to pay salary based on all hours the employee's works. For example, if her salary is $500 weekly, and she works 40 hours for the week, her regular pay rate is $12.50 per hour, but if she works 32 hours in a different week, her regular pay rate is $15.63. The employer pays her for the specific number of hours worked. When using the fluctuating workweek plan, the employer must express to the employee that the salary is contingent on her hours worked.

Overtime

Under the FLSA, an employer does not have to pay exempt employees overtime. However, a nonexempt salaried employee is eligible for overtime. The employer pays overtime at one and one-half times the employee's regular pay rate for work hours exceeding 40 for the week. Specifically, if a salaried nonexempt employee's hours reduce to below 40, he does not work overtime and consequently does not receive overtime pay. To determine the regular pay rate for a salaried worker, the employer divides the weekly salary by the required work hours for the week.

Considerations

The employer's state might have additional provisions for nonexempt-salaried employees, such as the frequency in which they should receive payment, the manner in which to calculate overtime and regulations for using the fluctuating workweek method.

References

• U.S. Department of Labor: Deductions
• Wisconsin Department of Workforce Development: Fact Sheet on the Payment of Salary
• California Department of Industrial Relations: Overtime
• Payrolltaxes.com: The Fluctuating Workweek Method
• Texas Workforce Commission: Regular Rate for Salaried Non-Exempt Employees

Resources

• U.S. Department of Labor: State Labor Offices