Last December, as the recession was beginning to deepen, Littler published an Insight, Furloughs and Reduced Hours: Cost-Cutting Strategies Other Than Layoffs, discussing several alternatives to layoffs, particularly mandatory furloughs of exempt employees, mandatory use of vacation/PTO during furloughs, and reduced workweeks, based on the limited legal precedent available at that time on these subjects. Recently, the U.S. Department of Labor (DOL) issued three opinion letters that address some of these alternatives. This Insight is an update to the December 2008 Insight and provides the latest legal analysis.


Mandatory Furloughs 0f Exempt Employees

Full Workweek Furloughs

Furloughs of nonexempt employees are fairly straightforward, but with exempt employees, furloughs are anything but straightforward. Furloughs that result in the exempt employee being paid less than his/her full weekly salary may jeopardize the exempt status. The December 2008 Insight discussed furloughing exempt employees for entire workweeks, which would not jeopardize their exempt status because no pay is due to exempt employees who perform no work during an entire workweek. According to the DOL’s recent pronouncements, this approach remains viable.



Click here to read the entire article.