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U.S. Department of Labor Releases Frequently Asked Questions for Furloughs and Other Reductions in Pay and Hours

August 17, 2009

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In July, the United States Department of Labor released an updated "Frequently Asked Questions Regarding Furloughs and Other Reductions in Pay and Hours Worked Issues." The FAQ can be found at http://www.dol.gov/esa/WHD/flsa/FurloughFAQ.pdf and answers basic questions regarding how the Fair Labor Standards Act ("FLSA") impacts reductions in pay or in hours worked by employees.

Given the current economic environment many employers are reducing their workforce. Other employers, instead of terminating employees, are reducing the compensation their employees’ receive or reducing the hours worked in order to reduce payroll. Any employer seeking to reduce pay or hours should be familiar with how the FLSA might impact such a decision. Many of the questions an employer may have are covered by the FAQ, which answers questions such as whether it is legal to reduce salary or hours of employees under the FLSA. The FAQ includes discussions of situations involving both exempt and non-exempt employees under the FLSA and can help employers avoid violating the FLSA.

Although the FAQ covers the FLSA, employers should be aware that reductions in hours or pay may also involve consideration of other employment laws, such as anti-discrimination or leave laws, which are not covered by the FAQ.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.