Salary employee; company closes for two weeks of the year and employees are not paid for those two weeks

[cbg]

That's not what he's doing. He is not changing the employee's status; he's closing down for two weeks.

Even an exempt employee need not be paid if they do NO work during the entire work week. If the closure exactly matches the work weeks (which I admit we do not know is the case) the exempt status is not invalidated at all. But even if it doesn't, the employer is not changing the status back and forth; he is taking a one-time action which causes a temporary suspension of the status. Each workweek stands alone. The exempt status is not determined by the announcement of a yearly salary and if what this OP is referring to actually is an offer letter and not a contract, the amount in the offer letter is, for the purpose of determining the exempt status, meaningless. As long as the salary floor is met each work week, the job duties and only the job duties are relevant. Not what the job status was last week or next week.

Now, if the employer were calling the employee exempt one week to avoid overtime and then calling her exempt the next week when she didn't work any extra hours, I'd agree. But a single closure that may or may not affect things at all is not the same thing.

 

[PayrollHRGuy]

https://www.dol.gov/whd/overtime/fs17g_salary.pdf

Circumstances in Which the Employer May Make Deductions from Pay

Deductions from pay are permissible when an exempt employee: is absent from work for one or more full days for personal reasons other than sickness or disability; for absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness; to offset amounts employees receive as jury or witness fees, or for military pay; for penalties imposed in good faith for infractions of safety rules of major significance; or for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions. Also, an employer is not required to pay the full salary in the initial or terminal week of employment, or for weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act.

Effect of Improper Deductions from Salary

The employer will lose the exemption if it has an “actual practice” of making improper deductions from salary. Factors to consider when determining whether an employer has an actual practice of making improper deductions include, but are not limited to: the number of improper deductions, particularly as compared to the number of employee infractions warranting deductions; the time period during which the employer made improper deductions; the number and geographic location of both the employees whose salary was improperly reduced and the managers responsible; and whether the employer has a clearly communicated policy permitting or prohibiting improper deductions. If an “actual practice” is found, the exemption is lost during the time period of the deductions for employees in the same job classification working for the same managers responsible for the improper deductions.

 

[cbg]

You are operating on the assumption that this is an improper deduction. I don't think we have anything like enough facts to make that conclusion definitely.

If the two weeks that the office is closed matches the work weeks, this is not an improper deduction.

If the employer allows the employee to take vacation time in lieu of wages, this is not an improper deduction.

If the employee is mis-classified and should be classified exempt, the employer has other problems but this is not an improper deduction.

 

[PayrollHRGuy]

You are operating on the assumption that this is an improper deduction. I don't think we have anything like enough facts to make that conclusion definitely.

(1)If the two weeks that the office is closed matches the work weeks, this is not an improper deduction.

(2)If the employer allows the employee to take vacation time in lieu of wages, this is not an improper deduction.

(3)If the employee is mis-classified and should be classified exempt, the employer has other problems but this is not an improper deduction.

1. Assuming the OP is correctly classed as OT Exempt if he is able and willing to work he should be paid.
2. Correct. The employer is free to schedule vacations as they wish but since the OP hasn't mentioned being required to take vacation I don't think that is the case.
3. I think you mean not classified as exempt, I agree that the employer has a much larger problem.

 

[cbg]

With regards to #1, please see the paragraph labeled Salary Basis Requirement and note the following: Exempt employees do not need to be paid for any workweek in which they perform no work.

 

[PayrollHRGuy]

https://webapps.dol.gov/elaws/whd/flsa/overtime/cr4.htm

In addition to meeting certain duties tests, to qualify for exemption under the Regulations, Part 541, generally an employee must be paid at a rate of not less than $455 per week on a salary basis. As a general rule, if the exempt employee performs any work during the workweek, he or she must be paid the full salary amount. An employer may not make deductions from an exempt employee's pay for absences caused by the employer or by the operating requirements of the business. If the exempt employee is ready, willing and able to work, an employer cannot make deductions from the exempt employee's pay when no work is available.

 

[cbg]

Okay. Let it be understood that PayrollHRGuy believes that this is an improper deduction regardless of the circumstances. Let it also be understood that cbg acknowledges that it MAY be improper but does not believe we have enough details to say for certain, and drop it already.

 

[PayrollHRGuy]

Well, I did agree that if vacation is paid it would not be a violation.