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Four-day work week
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Four-day work week
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I know this has been batted around before but I’m not having much luck locating a thread on the subject. We are considering a four-day work week with a prorated reduction in compensation for exe
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Four-day work week
posted at 6/22/2009 7:59 AM EDT
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Posts: 237
First: 7/10/2007 Last: 8/31/2011 |
I know this has been batted around before but I’m not having much luck locating a thread on the subject. We are considering a four-day work week with a prorated reduction in compensation for exempt staff. What are the “gotchas” in this? |
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Four-day work week
posted at 6/22/2009 9:33 AM EDT
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Posts: 35
First: 8/3/2004 Last: 6/20/2011 |
You should check in your benefits book to make sure going to the 4-day week will not cause employees to lose any benefits.
Also if you accrue leave time based on a 40 hour week, that will need adjusting. How will you treat Holidays that fall on the day that employees will not normally work? Will this cause employees to lose a paid holiday?? Just some things to think about. |
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Four-day work week
posted at 6/22/2009 9:55 AM EDT
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Posts: 237
First: 7/10/2007 Last: 8/31/2011 |
Good points Nork/Sniffles.
We're looking at more like a 7-10% reduction in comp for slaried emps, not 20%. The reduction shouldn't effect the full time emp's eligibility for benefits. P/T emps aren't eligible anyway. My concern is primairly with cutting the exempt employee's comp. |
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Four-day work week
posted at 6/22/2009 10:17 AM EDT
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Posts: 3870
First: 2/12/2002 Last: 11/2/2009 |
I wasn't a math major by any means, but if you're prorating salaries to a reduced work week of 4 days, it would seem that a reduction in the work week of 20% would result in a pay decrease of 20%.
So if you're reducing the work week by 20% and only reducing salaries by 7 - 10%, this sounds like a good deal. I retract my conjecture that you might suffer attrition. |
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Four-day work week
posted at 6/22/2009 10:18 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
You need to make sure that they are still making the full minimum amount per week after the cut. That amount can NOT be prorated...so federally it would still be $455 per week. Your state may differ in minimums.
I would be careful how you communicate this, because what happens now if an exempt as to work more than 40 hours per week? What will happen if the employee has to come in on the 5th day/day off? And here is one really good exerpt from an article on it: "...Recently the DOL opined that, in general, reducing exempt employees' work schedules with a corresponding reduction in salary because of lack of work violated the salary basis test. According to the Department, "salary deductions due to a reduction of hours worked for short-term business needs do not comply with [the salary basis test for exempt status] because they result from 'the operating requirements of the business.'" Indeed, the DOL opined that any deductions from salary due to day-to-day or week-to-week fluctuations of the business' operating requirements "are precisely the circumstances the salary basis requirement is intended to preclude." There is one ray of hope, however. The DOL further clarified that an employer may make a "fixed" and "permanent" decision to reduce the hours and corresponding pay for exempt employees.2 For instance, an employer could reduce the work schedule for the year from 52 five day workweeks to 47 five day workweeks and 5 four-day workweeks, and also reduce the pay of exempt employees as a result of the shortened workweeks. The linchpin of the distinction between this permitted approach and the impermissible hours reduction is the permanence of the acceptable schedule reduction as contrasted to a temporary reduction in the normal scheduled work week to address a short-term work slowdown or temporary economic conditions. Unfortunately, what constitutes a "permanent" change in work schedules has not been clearly defined..." http://www.mondaq.com/article.asp?articleid=78158 |
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Four-day work week
posted at 6/22/2009 11:14 AM EDT
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Posts: 245
First: 2/5/2003 Last: 10/7/2009 |
There is another option...
You are permitted to reduce the salary of an employee in conjunction with a reduction in hours so long as it is completely voluntary. What I have seen many employers do is to provide employees an option... They can either take full workweeks off without pay OR they can reduce their workweeks by one day per week. |
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Four-day work week
posted at 7/7/2009 7:55 AM EDT
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Posts: 1
First: 7/7/2009 Last: 7/7/2009 |
First, I applaud the goal...the challenge I think is the communication. Are the results expected of high-performing employees (the ones you *really* care about) going down 20%, or just the hours? I've seen A-players consistently overworked, because they step up for special projects and are so committed to the results, so managing the results-based work ethic of your high performers is one area I'd suggest exploring. I love the idea of "co-creating" a solution with your high performers...involve them in the solution...much more likely to be successful. Good luck! |
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