Q. "An exempt employee is dropping to part time indefinitely. Do we need to switch them to hourly nonexempt or can we just reduce their salary?"
Answer:
You don’t necessarily need to change their classification, but the minimum salary for exempt employees—determined by federal or state law—can’t be prorated based on the number of hours worked meaning you can only keep the employee exempt if, after the salary reduction, they still make at least the applicable minimum salary.
If their new pay is below the minimum for exemption, you’ll need to reclassify them as nonexempt and pay them based on the number of hours they work.