by Karen Elliott
Many federal contractors are feeling the financial pinch of the shutdown. While Congress is wondering whether or not it should pay its employees for their furloughed time, private businesses who contract with the federal government for work (federal contractors) don’t have the luxury of either the government’s bank account or legal exclusions from certain wage and hour laws. The wage and hour laws applying to private industry differ than those applying to the government, and federal contractors should be aware of the distinctions or possibly run afoul of the wage and hour laws.
Federal contractors may have many workers in their workforce designated as “exempt” employees. Exempt employees must meet certain statutory guidelines, including being paid a salary – a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. Of particular importance is the requirement that the salary may not be reduced because of variations in either the time, quality or quantity of work performed by the employee. Except for seven statutory exceptions, an exempt employee must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked. Employers who make unlawful deductions may convert the employee to non-exempt status and suffer financial consequences.
While the federal government may dock exempt workers because of a furlough and not lose the salaried exemption, private employers may not.
If you are a federal contractor, keep in mind the following wage and hour rules as you prepare payroll for the past and upcoming weeks:
1. For employees who are non-exempt, i.e. are paid based upon the time, quality or quantity of work performed, employers may furlough such employees without pay. (But be sure to pay for all time actually worked.)
2. If the employees are exempt from overtime, i.e. are professionals, executive, administrative or computer exempt, then private employers need to know the following in order not to endanger the exempt status of their employees:
3. A frequent question has been, “Do the private employees on furlough due to the shutdown accrue sick leave, vacation or PTO during the furlough? ”
Absent controlling state laws, policy or previous practice, consistency in application is key.
Read more labor and employment law articles at Virginia Workplace Law
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