For various business reasons, an employer may determine that it needs to move a full-time employee to part-time status. Before an employer makes such a determination, it should pause and carefully consider certain issues.
Madeline Lewis
There is no legal prohibition in New Hampshire on changing an employee’s status from full-time to part-time (or from reducing the employee’s compensation or role) as long as the decision is not for an unlawful reason. Employers should consider carefully whether any circumstances exist that could potentially expose the employer to an employment claim before making any change. Federal and state laws prohibit an employer from discriminating against employees, including because of the employee’s race, color, sex (which includes pregnancy, childbirth or related conditions, transgender status and sexual orientation), national origin, age, disability, or genetic information. Other laws protect employees from retaliation by employers for taking certain protected actions, such as complaining about job discrimination or an unsafe workplace practice or taking protected leave from work. Equal pay laws eashould also be considered if there are other employees in the same job title.
For example, if the employer initiates the employment transition after it learns of an employee’s pregnancy, the employer may risk a claim that the pregnancy discriminatorily motivated the employer’s decision to move the employee to part-time status.
Eligibility to participate in employer-provided employee benefits is often limited to full-time employees. If the transition of an employee to part-time status will cause the employee to cease being eligible for employee benefits, the employee may not accept the new position. Further, a reduction in the employee’s hours may constitute a “qualifying event” under the Consolidated Omnibus Budget Reconciliation Act (COBRA) or a state COBRA law, and necessitate the employer provide such employee with information to timely elect COBRA continuation coverage. Likewise, the employer will want to review the terms of any retirement benefits, like a 401(k) plan, or paid time-off benefits that it provides to its employees, and assess the impact of such an employment transition on such benefits.
There is no statutory requirement to provide severance to employees in New Hampshire, but if the employer maintains a severance plan, or has entered into a contract with the employee that provides the employee with severance in the event of the employee’s termination, the employer should also review the terms of such an arrangement to confirm the transition does not trigger the employee’s right to severance or constitute a breach of contract.
This issue tends to emerge if the plan or contract gives the employee a right to severance if the employee experiences a constructive termination, such as a reduction in the employee’s compensation or a change in position or job duties without the employee’s consent.
Employees are generally exempt or nonexempt. Exempt employees are paid on a salary basis and are ineligible for overtime. Non-exempt employees are paid on an hourly-wage basis and are eligible for overtime for hours worked in excess of 40 hours a week. If the employee being transitioned is exempt under the Fair Labor Standards Act (FLSA), and the employer intends to continue to classify the employee as exempt following the transition, the employee must receive a salary that is the equivalent of at least $684 a week and meet the duties tests under any of the following capacities: executive, administrative, professional, computer employee or outside salesman.
Therefore, the employer must carefully assess the pay in this transitioned role and whether the employee will continue to meet the duties test criteria to qualify as exempt. If the transitioned employee does not meet any of the above exempt categories, the employee will be non-exempt.
Best practice supports communicating with the employee about the reasons for the transition to help them better understand the justification for their change in employment status. New Hampshire law and NH Department of Labor rules require employers to notify employees in writing, at the time of hire, of the rate of pay, day of pay, and place of payment and benefits (health insurance benefits, vacation pay, sick leave and other fringe benefits). Employers must also notify employees in writing of any changes in the arrangements specified above prior to any such change going into effect. Both written notifications must be signed by the employee and should be maintained in the personnel file.
The transition of an employee to part-time status may make sense for the employer’s business from an economic or productivity prospective. Before taking such action, however, employers should carefully assess any such transition in order to reduce the potential of a later employment claim.
Madeline Lewis is a member of McLane Middleton’s Corporate Department and Employment Law Group.
