Can I reduce my employees wages and salaries due to economic slump?
Market Instability
The U.S. economy has seen its fair share of ups and downs. Any economy rarely remains stable for long. Due to this natural rhythm in the market, economists tend to have a more wide vision of its successes and failures over time. Our economy is the strongest in the world and has experienced net positive growth for over one hundred years. One of the most reliable markers of the economy is the stock market, and the best reflector of this is the Dow Jones Industrial Average. Incredibly, since the Dow Jones came into existence in 1885, its value has increased more than 500 times over.
The Downs
Unfortunately, there are times when it becomes hard to stay positive in our economic outlook. Despite our overall upward trend, when the market takes a downturn, it can be a shock. Small businesses can be left wondering how to handle it, and big companies tend to cut jobs and contract their operations. If you are a business owner during a recession and you are attempting to save jobs, there are options. Shuttering your business and laying off loyal employers is the method of last resort. So what can you do?
The Best of a Bad Situation
One of the ways you could handle this situation is by reducing hours worked by employees, but this is not optimal as it may result in a reduction in service, standards, and output. Not to mention, your non-exempt employees are only paid for the hours they work. The best method is to reduce your employees’ pay temporarily. Under the Fair Labor Standards Act (FLSA), employers are typically allowed to reduce exempt employees’ pay in situations that do not pertain to quality or quantity of work. This is providing that you are still paying the minimum salary due under the act. Your employees will be upset in this situation, but they will undoubtedly be happy to keep their benefits and their jobs in the long run.
A Helping Hand
During our current downturn, the federal government has stepped in to make sure small and mid-sized businesses hurt by state-mandated lock-downs remain solvent. While the government disbursed funds to individuals, it also made billions of dollars available to companies. The most notable of these is the Payroll Protection Program, which provides up to 24 weeks of payroll costs and benefits. It also allows for the payment of other listed business expenses. If you have further questions, please contact us.
by Nick Climan – Content Creator at Half Full Marketing
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