Thanks to a new opinion letter by the California Department of Labor Standards Enforcement (DLSE), California employers have a new tool for cutting employment costs during the down economy.  The opinion letters, taken together with Wage Orders and the California Labor Code constitute the bulk of rules governing wage and hour compliance in California.

The August 19, 2009 opinion letter now authorizes employers to reduce exempt employees’ workweek from 5 days to 4 days, along with a 20% pay reduction, without violating the exemption classification, so long as the employee still meets the minimum requirements for exempt status, such as the minimum salary (currently 2 times minimum wage based on full time employment, or $2,773.33 per month) and the overall work duty requirements.

The opinion letter was in response to an inquiry by an employer experiencing economic difficulties who sought to reduce hours and salary until economic conditions improved.