Adjusting Work Schedules to Avoid Layoffs is Legal!
We are getting calls from clients asking us if it is legal to adjust hourly employees schedules to avoid layoffs. Absolutely! There’s no contractual (unless it is a Union shop) obligation that prevents you from doing so. Determining how and when to schedule hourly employees, including reducing the number of hours or days worked, is at the employer’s discretion. Just keep in mind you must use an objective criteria when choosing specific individuals.
In addition, consider how a reduction in hours will affect exisitng sick leave, vacation, paid time off, and health insurance policies. An employee’s eligibility is often based on whether employment is full-time of part-time and a reduction in hours may cause a loss of eligibility. Keep in mind you can update your policy to reflect any changes and contact your healthcare provided to ensure compliance with any policies that they may have. Another factor to consider is that the employees may be eligible for unemployment benefits based upon the loss in income. The EDD will make the determination as to the dollar amount.
Finally, if you already have an alternative workweek schedule in place, employers may not reduce the established number of hours and days. Employers may, however, unilaterally repeal the schedule with reasonable notice to employees. Another option is to propose a different alternative schedule and hold a new election. Keep in mind, reducing the salary of an exempt administrative, executive, or professional employee in connection with a reduction in hours and days may invalidate the exempt status of the employee.
One more consideration. You should keep in mind that it is important to develop a strategy and evaluate how the reduction will affect your employees and your customers. As employee morale suffers, productivity may decrease, which may, in turn, affect customer service. Try to lessen the impact by advising employees that there will be reductions in hours and explain the reasons it is necessary.