A human resource manager or legal counsel tasked with reducing labor costs has many tools available to them. One of the first tools that companies should consider is furloughs. A major consideration involved with a furlough is whether the employees sought to be furloughed are exempt or non-exempt from overtime compensation.
It is easier to furlough non-exempt employees (generally hourly) than to furlough exempt employees (generally salaried). Under federal law, non-exempt employees may be furloughed for any period of time, including full weeks, full days or particular hours. For example, a non-exempt employee normally working a 40 hour workweek may be furloughed such that he orshe only works a 32 hour workweek, resulting in saved labor costs.