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Furloughs prove popular but risky

Nora Lockwood Tooher and Tony Anderson
Special to The Daily Reporter

Wary of depleting already lean work forces, employers are sending their workers home without pay as the latest cost-cutting measure.

But some employers are using furloughs without considering the legal issues involved. And employment lawyers warn businesses that aren’t careful may soon face wage and hour lawsuits.

One of the first questions employers face when considering furloughs is whether they will be voluntary or mandatory, and the answer, attorneys say, must come from a formal process.

“The voluntary furlough can be seen as more of a proactive circumstance where employees may feel they have more control over their futures,” said Jill Pedigo Hall, a partner at Gonzalez, Saggio & Harlan in Milwaukee.

Employees realize the financial struggles employers are facing right now, she said.

But understanding does not shield employers from legal complications, many of which involve salaried employees who are exempt from wage and hour regulations under the Fair Labor Standards Act.
Jonathan Shapiro, regional managing partner in the Portland, Maine, office of Fisher & Phillips, cautioned that any work done by exempt employees while on furlough requires they be compensated with regular salaries for that entire workweek.

That means no checking mail, voicemail or e-mail.

“It’s pretty difficult to enforce,” Shapiro said.

Some employers seeking to avoid the legal complications with exempt employees are changing workweeks by implementing a four-day workweek — or closing early on Fridays — during summer and reducing salaries by a comparable amount, Shapiro said.

Hall said she tells her clients one way to bring some structure to the process is to establish a formal plan to review duties and the number of hours a salaried employee puts into a regular workweek. If the employer establishes a four-day workweek, a written plan should outline the worker’s specific role and the timeframe for doing the work, she said.

“How do you guarantee that the employee who is now being paid four days a week is not working five?” Hall said. “The best way you can do that is to set out your expectations in writing.”

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