Salary Reduction

How do the furlough days and salary reduction correspond to each other?
Employees will receive the allotted number of furlough days specified for their salary band in hourly increments each month, and their pay will be reduced by a corresponding percentage in even increments each month during the 12-month Plan period. For example, an employee whose salary is within Salary Band 2 ($40,001 - $46,000) is allotted 13 furlough days off and will receive a 5% salary reduction, with the salary reduced accordingly for each pay period for 12 consecutive months.

 

Tier

 

Salary

Furlough Days

 

Equivalent Salary Reduction

Staff and Non-Faculty Academics

Academic Year Faculty

Fiscal Year Faculty

1

$0 – 40,000

11

7

10

4%

2

40,001 – 46,000

13

9

12

5%

3

46,001 – 60,000

16

10

14

6%

4

60,001 – 90,000

18

12

16

7%

5

90,001 – 180,000

21

14

19

8%

6

180,001 – 240,000

24

15

22

9%

7

Over $240,000

26

17

24

10%

(3/15/10)

|Back to Top|

What salary figure is being used to determine the applicable salary band for the salary reduction? What elements of pay are included? As of what date?
An employee's full-time salary rate, as of January 1, 2009 (or the hire date, if later), will be used to determine the salary band. This is consistent with the methodology used to determine salary bands for employee medical contributions. The salary rate is defined as the monthly salary the employee is appointed to receive under an academic, nonacademic, and/or administrative title payable through the University. This includes such things as stipends. It does not include:

  • overtime payments,
  • shift or other differential pay,
  • consulting fees or payments in lieu of private practice,
  • general assistance "by-agreement" payments,
  • compensation for extension teaching,
  • any remuneration received which is in excess of 100% of full-time equivalent of your regular and normal position, and
  • perquisites and any bonuses or other special compensation.

(7/21/09)

|Back to Top|

What types of pay will be reduced under the Plan?
Compensation subject to the Plan includes base pay, similar forms of regular pay and stipends. The following types of pay will NOT be reduced under the plan:

  • Pay for summer session teaching
  • Summer additional compensation
  • Teacher-University Extension (UNX payments)
  • BYA salaries
  • Overtime
  • Shift differential
  • Time on call
  • Bonus pay *
  • Incentive pay *
  • Terminal vacation pay
  • Severance pay
  • Workers' Compensation supplement
  • Health Sciences Compensation Program (Y and Z components only)
  • Pay associated with Extramural Funds (fund group EXTRMFUR)

* Many categories of bonus and incentive pay have been cancelled or deferred by The Regents.

Analysis of pay categories continues to be reviewed. More detailed information about how different types of pay will be impacted will be made available prior to implementation. (Revised 9/2/09)

|Back to Top|

Will the reduction be spread out equally over the Plan's term, or will pay be reduced in the month the furlough days actually occur (being that the January paycheck could be pretty brutal with all the holiday days in December, and would come right at the time people are paying off their holiday purchases)?
The reduction will be spread out equally over the Plan's term. (7/21/09)

|Back to Top|

Salary compression will become a factor for those employees who are paid at or near the different thresholds. How will the University address this?
In response to the many requests for a finer leveling approach, the Plan was designed with multiple cost reduction tiers ranging from 4 to 10 percent. Due to the nature of any graduated plan, there will be differentiating impacts for those near the tier thresholds. However, it should be understood that the Plan is temporary and, at this time, intended to be in force for only twelve months. (7/21/09)

|Back to Top|

The cost reductions may cause some employees to fall below their official pay ranges. How will this be addressed considering UC policy that employees are paid within range?
The Plan is only intended to last for twelve months and it is understood that it may cause some employees to fall, temporarily, below their pay range. (7/21/09)

|Back to Top|

Will employees be allowed to take a voluntary pay-cut prior to the Plan's implementation in order to fall into a lower reduction threshold?
Actions such as this would undermine the integrity of the Plan which is to help the University cope with and address the unprecedented drop in state funding for the fiscal years of 2008-09 and 2009-10. Also, a voluntary pay reduction would be considered permanent, and not subject to automatic reversal at the end of the Plan's term. Management should not encourage or allow these types of pay changes. (7/21/09)

|Back to Top|

How will overtime pay be calculated under the Plan?
Overtime pay that is derived as a percentage of base pay will be derived as a percentage of the pre-reduced rate of pay. (Revised 8/5/09)

|Back to Top|

How do we handle a merit increase received during the reduction period?
The employee's pre-reduced salary will be maintained in the payroll system while the Plan is in effect. A merit increase would apply to the pre-reduced salary, then the increased salary would be reduced by the applicable rate. The number of furlough days and the corresponding percent pay reduction will not be adjusted due to salary changes. Details about how to apply a merit increase in the payroll system will be addressed in implementation guidelines. (7/21/09)

|Back to Top|

Will there be guidelines addressing how new hire rates shall be set during this period? At a permanent rate and then reduced?
A new hire would be set up at a permanent rate, which would then be reduced by the applicable furlough rate. Details about how to set-up a new hire in the payroll system will be addressed in implementation guidelines. (7/21/09)

|Back to Top|

Should campuses include language in their offer letters in anticipation of the Plan?
Yes, it is recommended that the campuses include language in all offer letters, including offer letters to the Senior Management Group, which informs the candidate of the salary reductions under the Plan. (7/21/09)

|Back to Top|

How will the Plan impact the payout of vacation pay for an employee who leaves work while the Plan is in place?
Terminal vacation pay will be calculated based on the separating employee's pre-reduced rate of pay. (7/21/09)

|Back to Top|

Are furlough days considered "hours worked" for the purpose of determining whether overtime is paid during a week?
No, time off on furlough days is not counted as hours worked and would not be included in determining whether overtime is to be paid. For example, an employee who works four 8-hour days, takes one 8-hour furlough day, and then works an additional 6 hours during that week would be compensated at the straight-time rate for the 6 hours because he/she had not met the over 40-hour threshold for the premium overtime rate. (8/26/09)

|Back to Top|

Are there any FLSA consequences if the salary of an exempt employee (whether full-time or part-time) falls below the FLSA exempt test minimum as a result of the salary reduction under the Furlough Plan? Should the Plan ensure that exempt employees' salaries are not reduced below the exempt test minimum?
The FLSA exemption test for salary is $455 per week. For most employees, this salary test is mandatory. Given the amount, it is unlikely any existing FLSA exempt employees at the University will fall below the minimum salary exemption threshold through the pay reduction portion of the Plan. (8/26/09)

|Back to Top|

The Regents have acted to cancel or defer many bonus and incentive payments, but some incentive awards will still be paid during the term of the furlough plan. How will the furlough/salary reduction plan impact the calculation of these incentive awards?
Because incentive awards are made in recognition of performance and quality of work, and are not necessarily related to hours worked, un-reduced salary should be used in calculations of bona fide incentive plans. The payroll release to implement the furlough/salary reduction does not include incentive pay codes in those being reduced, and the calculation of incentive award amounts occurs outside of the payroll system. (10/9/09)

|Back to Top|

What will happen if my salary increases or decreases during the year?
The number of furlough days will not be adjusted due to salary changes throughout the year; it will remain the same until the end of the Plan term. (3/15/10)

|Back to Top|

Will faculty merits and promotions be affected by a salary reduction plan?
There will be no change to faculty merit awards for July 2009 or to the 2009-10 academic review cycle with actions effective July, 2010.  The Provost and Academic Senate Chair will convene a joint Academic Senate/Administration group in September 2009 to consider any possible temporary changes in future Academic Review Cycles beginning with the 2010-11 review cycle. (3/15/10)

|Back to Top|

Will senior leaders who have already taken a 5 percent pay cut face further reductions?
Senior UC leaders, including the President, all Executive and Senior Vice Presidents, the General Counsel and Vice President – Legal Affairs, all Chancellors and Executive Vice Chancellors, volunteered to have their salaries reduced by 5 percent beginning July 1, 2009.  With the Regents' approval of the furlough/salary reduction plan, the voluntary 5 percent reduction for this group ended effective September 1, 2009, and the senior leaders converted to participating in the furlough/salary reduction plan (with 10 furlough days). (10/9/09)

|Back to Top|

 

 

Can't find what you want?