We cut salaried employee hours and pay - do we have to pay OT? 11-06-2008

We recently changed the status of some employees to part-time exempt, dropping one day--or one fifth--of their hours and salary. They now work 32 hours a week. The owner sent them a letter stating that they are not entitled to overtime pay but that they are required to work any overtime.

I know that overtime was required only above 40 hours. I know that they're exempt and as such are not entitled to overtime pay. But it seems a little scary that he can cut their hours but then possibly turn around and make them work the old level of 40 hours at the new, lesser pay level.

Can he require them to work more than 32 hours without additional pay?

Rita Risser Replies:

The first issue is whether they are properly exempt. To be exempt they must perform a professional, high-level administrative or executive position which requires them to exercise independent judgment and discretion. If they are properly exempt, yes, he can require them to work overtime for no extra pay. If they are not exempt, in most states he must pay straight time for up to 40 hours and then overtime after 40 hours. (In some states, they must be paid overtime for more than 8 hours in a day, even if they do not work 40 hours that week.)

Generally, unless employees are unionized or have individual employment contracts, employers are free to raise or lower pay rates. So if these employees are exempt, the boss can cut salary but require them to work the same hours. If they're non-exempt, the boss can reduce the hourly wage, but must pay them for all hours worked.

Another issue is that they may have the right to quit and get unemployment insurance compensation as a result of the downgrade of hours. However, with the way things are right now I don't recommend that!

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