Dave Holcombe, Partner-in-Charge of the firm's Cincinnati office, was quoted in an April 3, 2009, Business Courier of Cincinnati article, "With More Layoffs, Furloughs Comes More Room for Error."
According to the article, with the U.S. economy having shed more than 4.4 million jobs since the recession began, and at an accelerating pace of more than 600,000 a month of late, potential legal claims abound. "There's no question that there's increased activity," said Holcombe.
Direct reduction in headcount through layoffs and terminations is one way for businesses to cut costs, according to the article. Another way is to cut personnel costs without getting rid of people, by reducing salaries or shortening employees' work weeks. That raises tricky legal issues, however, particularly with those who are "exempt" salaried employees ineligible for overtime under wage-and-hour laws.
Holcombe said reduced salaries in conjunction with shorter work weeks should be maintained for "some extended period of time" to avoid problems. Otherwise the attendant salary reductions might be viewed as inconsistent with employees' exempt status. That could lead to a determination that they are entitled to overtime pay, among other things, he said.
Another potential "trap for the unwary" related to exempt employees arises in the context of unpaid furloughs, Holcombe said. Furloughs—say, a one-week layoff for every employee implemented on a rolling basis over a couple months—are becoming an increasingly popular way to cut costs without layoffs. If exempt employees are on unpaid furlough, however, "they cannot perform any work during the furlough. That includes checking their BlackBerries or . . . otherwise doing anything associated with their work-related responsibilities," Holcombe said.