(Last Updated On: July 28, 2020)
By Jessica Carr
Can an employer reduce an employee’s salary during COVID-19?
Continuing employment during the coronavirus pandemic may be stressful, especially as pay and hours are altered to reflect the monetary needs of the workplace. If your pay is reduced you may ask yourself, is this legal? Whether or not your pay reduction is legal is complicated by factors such as your disability status and employee classification.
Americans with Disabilities Act (ADA) Protections
Some workplaces have been designated as essential and are required to remain open throughout the coronavirus pandemic. Others have sent employees to work remotely and are slowly bringing staff members back to the workplace as Massachusetts reopens. Regardless, employees who have been asked to work in person can request to work at home as a reasonable accommodation for a disability protected under the ADA. If working from home does not cause your employer undue hardship which would negatively impact the business, then this accommodation may be granted. It is important to remember that if you request to work from home Massachusetts law does not require employees to be reimbursed for the cost of setting up an office.
Under the ADA, employers must participate in a dialogue with the employee to determine if it is possible to provide equal benefits and privileges and still provide the job accommodation. If an employee can perform the essential functions of their job with accommodation, then it may be unlawful for the employer to reduce pay and benefits.
For example, if you are at high risk for becoming ill from coronavirus due to a pre-existing condition, your doctor may suggest that you work from home as an accommodation. After asking for this accommodation, your employer must engage in a conversation with you about how to provide this accommodation without reducing pay or benefits. The likelihood of your employer accepting this accommodation depends on your role in the workplace. For example, if you work as a computer programmer, it may be possible for you to complete your full job duties from home. But, if you are a car salesperson, working from home may require a readjustment of responsibilities, and the conversation may look different. The bottom line is that your employer must have a conversation with you regarding how to accommodate your disability, and then it will be determined if the accommodation, including the same pay and benefits, is possible. If you ask to work from home as an accommodation for a disability and, subsequently, your pay is reduced as a punishment for your request, the reduction may be retaliation. If you are unsure whether or not your pay reduction is the result of discrimination or retaliation, consult a lawyer.
Employment Categorization Makes a Difference: Exempt vs. Nonexempt
All employees are categorized as exempt or non-exempt. An “exempt” employee does not earn overtime under Fair Labor Standards Act (FLSA), while “non-exempt” employees must be paid overtime. Generally, professionals are exempt employees while blue-collar workers are non-exempt.
An exempt employee can be paid on a salary or hourly basis, but they do not qualify for overtime pay. In order to be considered an exempt employee, the worker must not be paid less than $684 a week or $27.63 an hour or perform certain job duties.
Exempt employees who are paid an annual salary must continue to receive full pay for any week in which work is performed. The salary of an exempt employee can only be reduced if their pay or job role is renegotiated. This renegotiation cannot amount to less than $684 a week or $35,568 a year, according to federal and Massachusetts law.
Non-exempt employees must be paid on an hourly basis and receive overtime pay for every hour worked over 40 hours in a week. An employer can reduce a non-exempt employee’s pay via renegotiation or a change in hours due to COVID-19. An employer only needs to pay the employee for the time that they spent working. Non-exempt workers do not need to be compensated for lost hours, but they still must be paid at least minimum wage, which is currently $12.75 per hour in MA. Hourly workers also earn 1.5 times their hourly rate for hours worked above 40 in one work week.
Retroactive Pay Reductions Violate the Law
It is illegal under the Massachusetts Wage Act to retroactively reduce pay. For example, if you are expecting to make $800 for the work done last week, but you get paid only $700, you may have suffered a retroactive pay reduction. A retroactive change in pay is an unlawful detention of wages. If you have suffered an unlawful detention of wages, you may be entitled to triple your lost wages and benefits plus attorney’s fees after successful litigation.
Did I suffer retaliation or discrimination?
Potentially. If you requested an accommodation, or inquired about retroactively reduced wages and were demoted, terminated, transferred, excluded, or otherwise retaliated against, you may have experienced unlawful retaliation. Contact experienced employment lawyer.