I own a small business (corp) with just a few exempt salaried employees. Thanks to the current economic conditions, our workload is slowing dramatically and may run out very soon. We do not want to lose these good employees given the unknown future, as we would need them when biz improves. We do not know if or when things might improve, of course. A couple questions:
1. Furlough vs. layoff. As the work slows to a trickle, do we advise the employees they are being furloughed and will not be paid after the last day of available work? Or go ahead and layoff people as is necessary? I've read the exempt salaried employees on furlough can't work at all - no email, phone, nothing - or else they must be paid for the whole week. That suggests if we run out of work on Tuesday and send them home, I pay them for the whole week. It also prevents me from giving them a small amount of work while furloughed i.e. a few hours or a day or two - which the employees would want since they need whatever money they can make. I would prorate their pay in that situation based on their salary. I've also read if they are furloughed, they can apply for UI immediately, which may conflict with our ability to have them work again - short or unknown longer term - when it is available. I would maintain their benefits if furloughed. It gets trickier yet when I consider they could be furloughed with benefits, but what happens if my business doesn't improve in 2, 3, 4, or more months, as at some point I would have to cut benefits, too, given the lack of cash flow. What to do?
2. Exempt salaried vs. hourly. Given the puzzle in question 1 above, should I convert everyone to hourly so I can pay them for whatever amount of work I can provide them? Is this allowed by law? If it is allowed, does that prevent them from filing for UI? That is not my objective, but it is a reality I would have to know how to handle. The employees may object if I tell them - or they figure out on their own - that hourly would work best but shuts them out of UI. I do not want to create animosity. I would maintain their benefits if hourly.
Are there other options to deal with these conditions I am missing?
Tough times, tough questions. Thanks.