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The Situation: Rein In Pay

To avoid a mass layoff, Santa needs to cut payroll costs immediately. Santa would like to drop Rudolph's salary from $65,000 to $50,000, but he's an overtime-exempt manager. If Santa reduces Rudolph's salary, will he remain overtime-exempt?

Pick an Answer

	Yes, but only if Rudolph's salary reduction is permanent.

	No, because federal law requires exempt employees to be paid a "fixed" salary, Santa cannot cut Rudolph's pay and keep him exempt.

	Although Santa may dock Rudolph's salary for a single pay period for financial reasons, he cannot permanently impose a salary cut.