Iowa Law Blog : Iowa Lawyer & Attorney : Sullivan & Ward Law Firm : Iowa Law Blog

In the wake of tough economic times, many companies are exploring alternative cost cutting methods.  One method is requiring employee furloughs.  Employers are using required furloughs rather than terminations as a cost-cutting measure.  If you are thinking about using a furlough at your company remember the following rules regarding non-exempt and exempt employees:

·         Non-exempt employees must be paid only for actual hours worked.  An employer may send non-exempt employees home as a cost-cutting measure without worrying much about the legal problems.  You will need to review any contracts, including collective bargaining agreements, your company may have with non-exempt employees before implementing a furlough to ensure that you are not violating any of the provisions contained within the agreement.

·         Exempt employees must receive full salary for any week in which work is performed, without regard to the number of days or hours worked.  If any exempt employee does not receive full salary for every workweek in which the employee performs any work, exempt status is lost and the employee is entitled to overtime pay.  In general, furloughs for exempt employees should be scheduled in full workweek increments to protect an employee’s exempt status.

These should be considered general rules.  If you have specific questions about implementing a furlough plan please contact your attorney.

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It's been said before: Wage and hour claims are the newest trend in the employment law area. Recently Wal-Mart got hit with a $6.5 million judgment for violating Minnesota wage and hour laws. The judgment could increase to $2 billion depending on the penalties imposed. Apparently Wal-Mart required employees to work off the clock and denied rest and meal breaks to employees. The 151 page opinion can be found here.

What can you do to prevent a wage and hour claim? Start by classifying your employees correctly. Employees are either exempt or non-exempt. The most common types of exempt employees are executive, administrative and professional. Non-exempt employees must be paid overtime.

Keep accurate records of the hours worked by non-exempt employees. Using punch-in and punch-out clocks may be the most accurate, but at the very least have employees write their hours on a time sheet for each pay period. Iowa law requires employers to keep these records for three years.

Make policies clear to employees and managers. If breaks are given to employees, make it clear to employees that they should or must take the breaks. Make sure managers understand this as well. It seems Wal-Mart's policy was to give workers meal and rest breaks, however, managers either directly or indirectly required employees to work during meal and rest breaks with no pay.

For more information on the wage and hour law check out the DOL website

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