As a business owner, cutting employee hours is never something you want to do.
But if profits are down—which can happen in Q1 of a new year—cutting full time employee hours may be an option to consider.
Here are five key things to know, from how to tell an employee you are cutting their hours to how to use attendance tracking software to make those adjustments globally.
1. Know the answer: Can you cut an employee’s hours legally?
Before you make the move to cut hours, know the law in your state. In general, business owners can cut employee hours to whatever point is necessary—as long as no one’s working for less than minimum wage.
- If you cut hours for salaried employees, that alone won’t affect their pay. You can also cut their pay too, but know that if you cut it below a certain level, they become hourly workers, which entitles them to overtime.
- If you have union workers, consult the union contract to ensure you adhere to advance-notice stipulations.
When it comes to telling an employee you are cutting their hours, balance the law with what feels right. In some states, you’re legally required to give warning that you’re cutting full time employee hours. But even if the law in your state doesn’t require it, offering notice as far in advance as you can is a good way to foster trust.
2. Cut costs elsewhere first
If you’re cutting full time employee hours because your business is experiencing tough financial times, consider cutting costs in other areas before you cut hours. Proving to employees that you’re willing to make tough calls before you dip into their pockets shows that you appreciate the work they do and the loyalty they’ve shown.
3. Give context to cut hours
Once you’ve made the call to cut hours, make sure to give your employees reasoning as to why.
- If you’re cutting employee hours because the industry or economy is experiencing a downturn, transparency is your friend. Give employees the facts, and ask if anyone has ideas on how to bridge the gap. You might even be able to turn adversity into opportunity if you have creative employees on your payroll who come up with ideas to make up the difference.
- The same is true if it’s just your company that’s experiencing financial difficulties. Talk to your employees frankly about what you’re going through and you’ll foster understanding while making them more receptive to cut hours.
- If you’re cutting full time employee hours in order to boost profits for a business that’s already doing well, offer employees another benefit to make up for cut hours. Consider a wage increase, a more flexible work schedule or increased work-from-home capabilities.
4. Be strategic with which employee hours you cut
If you’re cutting employee hours to stay financially solvent, try to reduce hours evenly across all positions and departments. If everyone’s hours and pay are cut to some degree, you’ll ensure no one feels singled out, and you may even create camaraderie around weathering the storm together.
If a uniform approach isn’t possible, be strategic. If you’ve already identified employees who have a bad attitude or who jump at any opportunity to go home early, they may be more open to taking days or hours off. Frame this as an opportunity for increased freedom and flexibility and you may avoid an issue altogether.
5. Make the change easy with attendance tracking software
Once you’ve made the tough decision to cut hours, you should be able to quickly apply the change across the board through your attendance tracking software.
With a solution like Time Tracker, you can easily manage employee time entries from one convenient location before syncing with your payroll and accounting software, and that includes updating hourly rates.
- Use your attendance tracking software to let employees clock in and out from any location.
- Capture every second worked with timers, which you’ll set to automatically sync with then new rates associated with cut hours.
- Once you’re able to return to normal pay, update the system to apply those changes universally ASAP.
If your company doesn’t currently use attendance tracking software, you should absolutely try that before you start cutting hours. Time Tracker has been shown to save 30+ hours in administration every month, and for some companies, that time may be enough to save you from having to cut hours at all.
Try a free, 14-day Time Tracker trial today and put us to the test.