The U.S. Department of Labor's Wage and Hour Division (WHD) recently posted on its Web site 40 opinion letters issued under the outgoing administration that were signed before January 21, 2009. At the same time, however, the WHD withdrew 20 of the opinion letters that were signed before, but not mailed by, January 21. Notably, several of the January 2009 opinion letters that have not been withdrawn provide timely guidance to employers seeking to reduce the workweeks and salaries of exempt employees.

An opinion letter signed by the Administrator of the WHD is an official ruling or interpretation of the WHD, which provides a potential good faith reliance defense for violations of the Fair Labor Standard Act (FLSA).

Three of the January 2009 administrator opinion letters that have not been withdrawn (FLSA2009-2 (1/14/09), FLSA2009-14 (1/15/09), and FLSA2009-18 (1/16/09)) address whether employer staffing adjustment policies reducing the number of hours worked per week affect the exempt status of executive, administrative, and professional employees under Section 13(a)(1) of the FLSA. The WHD's guidance will assist employers that are currently implementing or planning similar strategies to avoid employee lay offs.  The opinion letters provide that employers may not make salary deductions for full or partial day absences caused by the employer (e.g., for lack of work) if the employee works any day in the week. Although an employer may not reduce an exempt employee's salary for lack of work due to fluctuating business needs, the opinion letters highlight several other options that do not run afoul of the FLSA:

  • Employers may require employees to use accrued paid time off for a reduction in hours, so long as the employees still receive payment in an amount equal to their guaranteed salary;

  • Employers may give employees the option of taking voluntary time off, with or without pay. Deductions from pay may be made when an employee voluntarily takes off one or more full days for personal reasons, so long as the employee’s decision is completely voluntary;

  • Employers may reduce an employee's salary in connection with a reduced workweek when the reduction in salary is fixed and the reduced workweek is for a planned period, provided the employee still receives the minimum salary under the salary test (currently $455 per week).

Copyright © 2009 by Ballard Spahr LLP.
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