Exempt Employee Abuse

A reader sent me an email for advice.

The reader wrote:

“I am currently a salary employee with an exempt tag. There are times I am required to work over 40 hours with no additional compensation. I understand this and ok with it.

However, there are also situations that arise from time to time when buisness slows down and we are required to take MTO Mandatory time off. When required to take time (example), my boss comes in at 1:00 and tells me to go home, further in to the discussion I’m told I must use vacation or personal hours to compensate me for the time from 1:00 to my normal quitting time even though I’m salary. This seems like unfair labor practice. Could you provide me any advice regarding this situation?

Thanks,
A concerned salaried employee.”

This is unfair labor practice; however it is questionable as to whether it is illegal.

1. If you are truly exempt, your company has policies as far as how many hours you must work (not more than 40 in the States). The key is that an exempt employee does not work on an hourly basis.

2. This employer obviously does not want to make this position non-exempt because then he will have to pay for all additional hours as “over-time.” This is often time and a half. It will cost him more.

3. I know of no legal entity called “MTO” or mandatory time off. Vacation time is earned. If you use vacation time to cover expenses while business is slow, you lose your right to decide how you spend your earned time off. That is not fair. However, if your company is truly in jeopardy of being forced to take more drastic measures such as lay-offs, it might be a good compromise. You do not know what is really going on financially most of the time, and herein lies the rub that I have with this approach. Is the manager being forced to use his precious vacation time?

The situation this reader is facing is very likely to be abuse as much as it is a job saving strategy. The company probably has busy and slow times. During the busy times, the employer does not want to pay for all the hours needed to get the job done - so the employees are “exempt.”

When times are slow, they want to cut costs by getting employees to eat up their earned vacation time.

I did a little research and came across this article that describes this situation perfectly. In the case presented in this article, most of the employees were in favor of their employer shutting down for the Christmas holidays, although they were not thrilled with having to use vacation time. Stanford did a good job of communicating the situation to he employees.
To read about Stanford University’s approach, read “Workers Upset Over Mandatory Vacations.”

Several years ago in the tech recession, Hewlett Packard asked its employees to voluntarily take six days of paid vacation time off before the end of the fiscal year, which was in October. They later (June) asked them to voluntarily give up vacation time or accept a cut in pay until the end of the next fiscal year. Like Standford University, in December, HP closed its offices for a week at Christmas and employees received a Christmas gift of three days with NO pay.

Did this help the CEO retain his bonus? Did it really keep HP from shutting offices? Who really knows. Unfortunately my experience in corporate America is that companies make most of their decisions to protect the owners of the business, whether stockholders or private families at the expense of their employees.

My advice for this reader’s situation is to read HR policies. Most companies have no written policies that would give them the right to force employees to use their earned vacation time when it is best for the company.

Secondly, consider your value as an employee. Are you a high performer? Are you valuable and do they REALLY want to keep you as an employee. If the answer is yes, I would talk to the manager and express your concern about what he is asking you to do. Have a professional conversation. I mean no insult to my reader, but I do have to say this. If the manager does not give an answer that you feel is solid, tell him that you need to contact HR to learn more about their policy concerning MTO (using their acronym). I would be shocked if they had a policy.

Even if HR is uncooperative and you feel that this is an untenable situation, you should consider your options.

1. Find a reputable lawyer in your area that understands labor law and give him a call and explain the situation. Most lawyers will listen to a situation before turning the meter on. If they feel that something smells just a little off, they will help you out.

2. Consider looking for another job. Companies that go through these cycles are often managed poorly. Who suffers? You do. I bet the CEO isn’t taking a pay cut. If it is a small business, the owner is often suffering along with the employees. You have to decide if you like roller coasters.

3. Ride it out, and if it does not improve within 6 months, take action. This is not my preferred option; however I include it to be fair. Sometimes companies are truly in a tough situation and are really trying to keep people employed. They just do a really terrible job communicating.

This is an excellent topic and I would love to hear more stories.

Remember - “Time is money.”