How far can hours be reduced/pay cut without a furlough?

[mbasherp]

I expected to be furloughed in response to the virus. However, my employer surprised me and wants to keep everyone on with reduced hours of pay for no work, probably related in no small part to the passage of the forgivable small business loan legislation.

This is great and all, but we are being reduced A LOT. I would do better on unemployment, certainly now with the higher amounts. I know that alone isn’t reason to file for unemployment, but I do wonder:

Is there a line at which no employee can reasonably be expected to “get by” with a certain amount of cuts?

How are these situations handled? Is there a legal line (eg 50% of normal pay)? Or can an employer legally say we are paying you 1% of your normal rate, we aren’t furloughing or laying you off? There’s a gray zone but definitely an extreme where the employee is being abused.

[simas]

isn't this state specific?

[HomeStretch]

Perhaps your company is unaware that unemployment benefits are higher than the reduced salary proposed.

[Jack FFR1846]

In some states, hour reduction qualifies you for unemployment. Maybe call your unemployment office.....although there will likely be a long wait.

[mbasherp]

isn't this state specific?

I don’t know. I can’t find any information along these lines on my state’s UI page.

[simas]

isn't this state specific?

I don’t know. I can’t find any information along these lines on my state’s UI page.

what does the department of labor of your state says when you contact them (by email and/or through form submission)? it is a fair question.

[JonnyB]

Does your company qualify as a small business with less than 500 employees? If so your employer should be applying for a CARES Act Payroll Protection loan. This allows your employer to get a loan of up to $10,000,000 to continue paying employees full wages and health insurance. The loan is 100% forgiven if used for the approved purposes of payroll, mortgage interest, rent and utilities.

If your company qualifies, ask your employer about the Payroll Protection plan. They really shouldn't be cutting your pay even if you are not working at all.

Payroll protection is better than a furlough/layoff because it means you keep your employer health insurance. And it is good for your employer because you remain connected to your employer and ready to start work immediately when needed.

[mbasherp]

isn't this state specific?

I don’t know. I can’t find any information along these lines on my state’s UI page.

what does the department of labor of your state says when you contact them (by email and/or through form submission)? it is a fair question.

I'll admit, my assumption was that I should gather as much information (including from Bogleheads) as possible before contacting their severely overburdened system. Perhaps I should change that.

Does your company qualify as a small business with less than 500 employees? If so your employer should be applying for a CARES Act Payroll Protection loan. This allows your employer to get a loan of up to $10,000,000 to continue paying employees full wages and health insurance. The loan is 100% forgiven if used for the approved purposes of payroll, mortgage interest, rent and utilities.

If your company qualifies, ask your employer about the Payroll Protection plan. They really shouldn't be cutting your pay even if you are not working at all.

Payroll protection is better than a furlough/layoff because it means you keep your employer health insurance. And it is good for your employer because you remain connected to your employer and ready to start work immediately when needed.

Yes, that is what they are applying for, no doubt. Perhaps I'll hear an update from them once they have more clarity on what they are getting from the Payroll Protection loan. Right now, the best outcome for me is to be laid off, which I never would've imagined in "normal" times. (We do not have employer sponsored health insurance.)

[megabad]

My understanding is that this exact situation was covered by the CARES act. I believe you would typically receive a prorated portion of your pay in unemployment, but I am sure there are a ton of caveats and confusion so I would defer to your states unemployment office.

[dandinsac]

I’m not an expert, so feel free to correct my understanding. It depends on your location.

If you are an exempt employee, then $684 per week (or $35,568 annually) is the minimum per this site https://www.wagehourinsights.com/2019/0 ... ry-1-2020/

If you are non-exempt / hourly, then minimum wage laws apply. Federal minimum wage is $7.25/hour, while many states or municipalities have higher amounts: https://www.thebalancecareers.com/2018- ... es-2061043

[JonnyB]

Yes, that is what they are applying for, no doubt. Perhaps I'll hear an update from them once they have more clarity on what they are getting from the Payroll Protection loan. Right now, the best outcome for me is to be laid off, which I never would've imagined in "normal" times. (We do not have employer sponsored health insurance.)

I agree. If your employer isn't providing health insurance, you are likely better just being laid off. You likely will get better benefits through the enhanced unemployment insurance. You receive your normal state benefit plus an extra $600 per week on top. Note that unemployment insurance is not subject to FICA taxes so your take home is effectively 7.5% higher than the equivalent earned wage.

Revised:
Depending on your state's rules, you might be able to collect partial unemployment benefits if you remain employed but have reduced hours. In that case, since you are collecting unemployment insurance, you might also be eligible for the flat $600 weekly enhancement. If that is all true, then you would get your reduced wage from your employer, a partial unemployment benefit, plus $600 per week. You should verify this with your local unemployment office. Unfortunately there may be long hold times because the overwhelming layoffs.

[mbasherp]

I’m not an expert, so feel free to correct my understanding. It depends on your location.

If you are an exempt employee, then $684 per week (or $35,568 annually) is the minimum per this site https://www.wagehourinsights.com/2019/0 ... ry-1-2020/

If you are non-exempt / hourly, then minimum wage laws apply. Federal minimum wage is $7.25/hour, while many states or municipalities have higher amounts: https://www.thebalancecareers.com/2018- ... es-2061043

Thank you. This is actually a lot of what I was wondering. Even if the current situation might end up being slightly different, it is good to know.

I agree. If your employer isn't providing health insurance, you are likely better just being laid off. You likely will get better benefits through the enhanced unemployment insurance. You receive your normal state benefit plus an extra $600 per week on top. Note that unemployment insurance is not subject to FICA taxes so your take home is effectively 7.5% higher than the equivalent earned wage.

Revised:
Depending on your state's rules, you might be able to collect partial unemployment benefits if you remain employed but have reduced hours. In that case, since you are collecting unemployment insurance, you might also be eligible for the flat $600 weekly enhancement. If that is all true, then you would get your reduced wage from your employer, a partial unemployment benefit, plus $600 per week. You should verify this with your local unemployment office. Unfortunately there may be long hold times because the overwhelming layoffs.

That’s great. Thank you for the clarity. This will also help inform me for my next conversation with my employer, which I will initiate this week if they don’t.