As federal agencies adjust their worksites to the realities of the COVID-19 pandemic, these changes will likely have a direct impact on government contractors and their employees who work at those sites. If the government closes or reduces operations at a site, a contractor may be forced to furlough or reduce the hours of employees. Some reduction actions could result in an employee who was exempt from overtime payments under the Fair Labor Standards Act (“FLSA”) being reclassified as non-exempt, which would require the employer to pay the employee overtime wages, with negative long-term repercussions.
An employee may volunteer to reduce her salary for any period of time without any FLSA consequences so long as her decision is completely voluntary. To the extent the employer must impose involuntary reductions on an exempt employee, the following options are available that should not result in the employee being reclassified as non-exempt under FLSA: