“If I could sum up why I’m committed to the HR Girlfriends community it would come down to because we are ‘….in this together.'”

~Sana’ Rasul, Chief Girlfriend

Q&A: Can we reduce pay because of economic slowdown due to COVID-19?

You can reduce an employee’s rate of pay based on business or economic slowdown, provided that this is not done retroactively. For instance, if you give employees notice that their pay will change on the 10th, and your payroll period runs from the 1st through the 15th, make sure that their next check still reflects the higher rate of pay for the first 9 days of the payroll period.

Non-exempt employees (those entitled to overtime)
A non-exempt employee’s new rate of pay must still meet the applicable federal, state, or local minimum wage. Employees must be given notice of the change at the time of the change, or before. This gives them the ability to stop working if they don’t agree with the new rate of pay and can help prevent a wage claim.

Exempt employees (those not entitled to overtime)
An exempt employee’s new salary must still be at or above the federal or state minimum for exempt employees. The federal minimum salary is $684 per week. Several states have weekly minimums that are higher than that (California and New York, for instance, are in the $1,000 per week range). The minimum may not be prorated based on hours worked.

Exempt employee reclassification
If an exempt employee has so little work to do that it does not make sense to pay them the federal or state minimum (or you simply cannot afford to), they can be reclassified as non-exempt and be paid by the hour instead. This must not be done on a very short-term basis. Although there are no hard and fast rules about how long you can reclassify someone, we would recommend not changing their classification unless you expect the slowdown to last for more than three weeks. Changing them back and forth frequently could cause you to lose their exemption retroactively and potentially owe years of overtime.

Employees with contracts or CBAs
If employees have employment contracts or are subject to collective bargaining agreements, you should consult with an attorney before making any changes to pay.

Answer from Kara, JD, SPHR: 
Kara practiced employment law for five years and worked in Human Resources for several years prior to that. As an attorney, she worked on many wage and hour and discrimination claims in both state and federal court. She holds a Bachelor of Arts degree from Oregon State University and earned her law degree from Lewis and Clark Law School.

Leave a comment

Never miss an opportunity to earn HRCI/SHRM credits, identify a mentor, or connect 1:1 with another HR Girlfriend in your city or across the country.

0 Comments
Inline Feedbacks
View all comments
Author picture

HR Girlfriends™ is a Human Resources networking organization dedicated to advancing the practice and culture of people empowerment. Our team of Girlfriends consult, train, educate, develop, share, promote, and advocate for solutions in the field of human resource management.

Are You IN?
Or Are You OUT?

It’s time you join forces with a community of like-minded peers ready to tackle the issues unique to the women of HR.
  • All
  • Affirmation
  • Career Mondays
  • Certification
  • COVID-19
  • CyberSAFE
  • Guest Blogger
  • HR Advisor
  • HR Law Alert
  • HR Q&A
  • HR Reading
  • HR Reel Talk
  • Join Our Team - Apply Now
  • Membership
All
  • All
  • Affirmation
  • Career Mondays
  • Certification
  • COVID-19
  • CyberSAFE
  • Guest Blogger
  • HR Advisor
  • HR Law Alert
  • HR Q&A
  • HR Reading
  • HR Reel Talk
  • Join Our Team - Apply Now
  • Membership
Affirmation

Affirmation: 13 Bedtime Rituals That Encourage Mindfulness

When you were little, you probably had bedtime rituals that helped you go to sleep. Maybe your parents told you to put on your pajamas
Read More →
Career Mondays

Career Monday: Say Goodbye to Feeling Lonely at Work

If you feel lonely at work, you’re not alone. It may be the natural result of technology that reduces face to face interactions and increases
Read More →
HR Q&A

Q&A: Working Interviews

Yes, you can have a working interview as part of your selection process, but there’s a big caveat. If you have the candidate do “real
Read More →
Share via
Copy link
Powered by Social Snap