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Part time salaried with big time problems

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  • Part time salaried with big time problems

    First - - I know this is trouble and we are quickly trying to find new employment. However, I need to know the legal issues in our current situation in the meantime.

    My wife is employed and is considered by her employer to be "part time salaried" which I have learned does not legally exist. Her wages are also at about $430 which is less than the DOL required $455 (required as of Jan 2011) to call her a salaried exempt employee. However, this is what and how she is being paid. Her hours vary between 20-25 per week. She keeps track of her hours, but her employer does not and has never asked her to submit them.

    The admin assistant also was just released and salaried employees are required to pick up her tasks as well. I've heard that salaried employees cannot be asked to do hourly employee tasks, but the only thing I've seen on it is in CA, so not sure if that is relevant.

    Now with hard times, the employer cannot make payroll, and so has concocted this idea that they will either:

    1) pay employees what they can and give them an IOU
    2) ask employees to take a voluntary layoff (which I understand would then disqualify them for unemployment) and which then would require all remaining employees to pick up the hours (at no extra pay of course).
    3) rotate the layoff with one week to this employee and the next to another and so on, thus using that first week of unemployment you can't collect in order to avoid ever paying unemployment.
    4) Lay them off to collect unemployment and ask them if they would be willing to donate their time until they can be "rehired" at full wages. This of course might be never.

    Once the employer finds out there is no such thing as a part time salaried employee, I suspect they will seize the opportunity to switch over to hourly and cut the hours to just a couple per week so as to avoid unemployment.

    So my questions are:

    1) What are the ramifications for the employer who thinks he has exempt employees but does not?
    2) Are any of the above situations legal?
    3) Can the employer take employees they've been treating as salaried (but legally don't comport), switch them over to hourly, and then cut their hours to avoid unemployment?

    Our preferences of course would be to just go ahead and take a layoff, but I doubt that can be forced. However, I suspect there are situations where what the employer does constitutes a layoff. Can any light be shed on this?

    Thanks in advance for your help.

  • #2
    You seem to have a few issues going, as well as a few misconceptions.
    - Not all salaried employees are Exempt. Not all hourly are non-exempt. It would be more accurate to say that the default is non-exempt and as long as the MW/OT rules are followed, then salaried, hourly, piece work and sun-spot activity are all equally legal methods of paying non-exempt employees. Any employee can be non-exempt. Microsoft can treat Bill Gates as non-exempt if they want. HOWEVER, not all employees can be Exempt. There are something like 100 or so Exempt classifications, each with it's own rules. If an employer is claiming that a specific employee is Exempt, then the employer is legally required to support that particular Exempt status if challenged by the government. Failure to do so means that the employer will be held for failure to pay MW/OT (which is always legal). Rather then try to come up with a one-size-fits-all rule affecting a bunch of employees, the government would look at each questionable Exempt employee one at a time.
    - 4 of the 100 or so Exempt classifications support the Salaried Basis requirement of $455/week. Of course, even those 4 have exceptions. Those 4 classifications are Administrative, Executive, Professional and IT Professional.
    - It is not true that an otherwise valid Exempt employee becomes non-exempt the second that they do any non-exempt tasks. What is instead true is that you need to look at the very specific classification in question and look at the duties tests. ALL Exempt employees are already doing a certain amount of non-exempt duties. Even surgeons wash their own hands last I heard. The trick is looking at all duties the employee performs and seeing if they still (or ever) passed the duties test for their specific classification.

    The answers of your specific questions.
    1. If the employee fails the very specific Exempt classification, then they are likely non-exempt, subject to MW/OT. However, since 2004, federal DOL looks at just how badly the failure is. If it is small or incidental, DOL can choose to ignore the fault or fine the employer and keep the Exempt classification intact. If DOL deems the failure significant, then basically the employee is non-exempt, maybe retroactively, and MW/OT obligations is calculated and compared with actual pay.
    2. Some are legal and some are not. The word I would look for is "stupid". If the company is in trouble, make everyone hourly non-exempt and pay MW, and do not allow OT. That is the legal floor that will never go away. Past that, your answer depends on the state. Also different points have different answers.
    2a. Depends on the state. CA would hate this approach (unless they were the ones doing it). FL could not care less if the employer cooked and ate the employees. The only smart decision is to tell everyone they are getting paid MW with some possible pie in the sky when they go to heaven.
    2b. Asking people to voluntarily lay themselves off is legal. So if involuntarily laying them off. So is telling them to flap their arms and fly south for the winter. The employer telling almost any employee to work almost any hours the employer wants is legal. The only real question is the Exempt status and how the employees are paid.
    2c. Rotating layoffs are legal. In most states the first week is a waiting period, but the claim lasts one year and the waiting period is a one time thing.
    2d. Donate time is flat out illegal in almost all situations. Basically the employer has to be governmental in nature for that to work. Or a non-profit employer in which the donated time is UNRELATED to their normal jobs. Only really stupid private sector employers would try such things. It is the labor law equivalent of making bomb jhreats on an airplane.
    3. Salaried is just a payment method and does not legally mean much. If you are asking can the employer take an employee who used to be Exempt Salaried and turn them into some flavor of non-exempt, say hourly, on a go forward basis, of course, perfectly legal, and likely a very good idea given the situation you describe.

    Not your question, but the employee(s) need to be looking for a new job at a new employer, NOW, and stop waiting for the axe to fall. The sort of things you are talking about are actions taken on the Titanic after it hit the iceberg. Arguing about who gets which seat at dinner when everyone should be screaming and running for the lifeboats.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)


    • #3
      Agreed with DAW. For reference:

      However, Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. Section 13(a)(1) and Section 13(a)(17) also exempt certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week.

      -You're confusing non-exempt/exempt with salaried and hourly. A salary is simply the means of calculating pay. So long as the rate of pay does not violate MW/OT rules, the DOL does not care how pay is technically calculated. Since your wife is PT, then it is unlikely OT has ever been an issue.
      -If they meet the requirements to be classified as exempt, then the employer can ask the employee to do whatever the wish for them to do. Period. It does not matter how menial the tasks are.

      If it appears things are going downhill this quickly, she should definitely be seeking new employment. I would also suggest she not sign the voluntary layoff because of the extreme difficulty getting UI then. Also, depending on the state, if she receives partial payment or no payment for hours worked then that could be considered constructive discharge.


      • #4
        Also, as long as the job duties qualify and the salary floor is met (which admittedly it is not in your wife's case) it is entirely possible to be both part time and exempt. They are not mutually exclusive.

        In most states it is also possible to be part time and salaried non-exempt. Just because the DOL does not list it as a separate status does not mean that it cannot legally be done.
        The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.


        • #5
          Update: She would be considered administrative and she does work for a nonprofit. I'm not questioning so much whether her past pay has been legal since she would more than qualify under MW/OT rules, but more whether because she is not a salaried employee under the 455 rule, that they can therefore adjust her salary to whatever they can afford to pay so they "can afford" to keep her, and thus she has work and doesn't qualify for unemployment.

          As of this morning, my expectations have been upheld in the theory they are now proposing, now saying that because they are "part time salaried", they can adjust that salary to whatever they are able to pay that week (could be $100) and still require that they put in whatever hours are required to handle the job.

          Also, so would that mean donating her hours (to a nonprofit) in exchange for a layoff to collect UI would be legal? Seems like it's walking a legal tightrope to me, but I'm not sure.


          • #6
            There is a donation exception for a non-profit but it is a very small exception. The hours donated must be unrelated to the normal duties. Example. An accountant for Salvation Army can legally donate time to go out ring bells but cannot donate accounting time.

            If the employee fails either the duties or salary basis test for the Administrative exception, then they are non-exempt. Meaning for each workweek, the employer must pay at least MW/OT.

            Whether the employee is non-exempt or Exempt, the employer likely can make the employee work any hours the employer wants. That legally is not an issue. The only issue is whether or not since the employee is non-exempt (per what you say), that the MW/OT rules are being followed. Even if once upon time the employee used to qualify for the Administrative exception, you seem to be saying that now they do not. Certainly at what point they were no longer being paid at least $455/week, they failed the Salary Basis test for the Administrative exception. They may at some point in time also have failed the duties test, but failed is failed, and it is harder to argue a Salary Basis failure then a duties test failure.

            And one more time. The employee needs to start looking for a real job with a real employer now. This minute. Do not quit the old job, but start looking now.
            "Reality is that which, when you stop believing in it, doesn't go away".
            Philip K. **** (1928-1982)


            • #7
              You cannot donate your hours to work for a non-profit on tasks that you normally complete for your salary. So, for example, if you normally handle bookkeeping and are asked to donate hours paying bills next week, that's a no-no. If you volunteer to answer phones for a weekend fundraiser, that's probably going to be okay. It has to be a pretty clear delineation and separation of tasks, departments, etc. And before your boss suggests it, I'm fairly certain the DOL will take a dim view of asking everyone to "switch chairs this week." Volunteers need to be volunteers, not employees going without pay.

              cut the hours to just a couple per week so as to avoid unemployment

              There is such a thing as claiming partial unemployment. Typically when people are cut from full-time to part-time, they apply. With part-time status, I am not sure if your wife has worked enough hours and enough quarters to qualify for benefits but that may be worth investigating.

              I agree with DAW's assessment of the status of this company, in comparing it to the Titanic. Good luck to your wife in her job search.

              Edited to say, geez. DAW beat me to it.
              Last edited by J.J. Brown; 05-10-2011, 09:11 AM.


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