The latest reports coming out of the northeast say that there are at least 7 million people without power because of Hurricane Sandy, and that number is expected to grow before it gets better. So when you close your business because of bad weather or power outages, are you required to pay employees? Here are the answers in a few common scenarios.
Q When a company closes because of inclement weather, must you pay an hourly nonexempt employee for the days the business was closed?
A No. You aren’t required to pay an hourly nonexempt employee for the time the business was closed. At the company’s discretion, the hourly nonexempt employee may be allowed to use vacation days.
Q If a nonexempt employee isn’t able to leave the company’s facility because of inclement weather and continues to work, must the company pay the employee overtime for any hours worked in excess of 40?
A Yes. Nonexempt employees who work more than 40 hours in a workweek must be paid overtime. If the employee is at your facility more than 24 hours, is relieved from duty, and is provided adequate sleeping facilities, you may be able to deduct up to eight hours of sleep time per day.
Q Must a nonexempt employee who reports to work and then is sent home because of inclement weather be paid for the full day?
A It depends on the pay plan that is in effect for that employee. Some states have statutes that require that employees be paid for two to four hours of reporting time. Thus, you should check for any state or local laws that may be applicable.
If the nonexempt employee is paid on a “fixed salary for fluctuating workweek” pay plan, you must pay him his full salary for the week if he works any portion of the workweek. Consequently, if your firm was open on Monday but closed because of inclement weather the remainder of the workweek, an employee working under that plan would be entitled to his full salary for the workweek.
Q How is a salaried exempt employee to be treated for the days the business was closed?
A The regulations related to the requirements for exemptions state that “an employee is not paid on a salary basis if deductions . . . are made for absences occasioned by the employer or the operating requirements of the business.” The U.S. Department of Labor (DOL) has interpreted that to mean that you may not deduct the employee’s salary for time missed because the business was closed for inclement weather
Although exempt employees must receive their pay for such periods of time, employers may offset that pay by deleting time from vacation or paid time off (PTO) accounts. In the absence of a union contract or policy to the contrary, an employer’s only obligation is to be sure that the exempt employee is provided with the regular amount of actual pay for the time. Courts have ruled many times (and the U.S. Department of Labor has finally acquiesced) that deductions from PTO, vacation accounts, and other “mythical time banks” aren’t deductions from wages and therefore don’t jeopardize an exempt employee’s status as a salaried worker.
Conversely, if the business is open but the employee chooses not to report to work for a full day or more, you may dock her pay as provided in the regulations. Also, you may charge a partial-day absence against the employee’s leave bank as allowed under the regulations.
You are, of course, always free to pay employees beyond what the wage and hour laws require. In extreme emergencies, like Hurricane Sandy, many employers have been able to keep their workforces intact by paying them a stipend until the business is up and running again. It’s an expensive option, but it’s cheaper than trying to recruit an entirely new workforce.
Pay issues aren’t the only HR concerns that arise with bad weather. For more on how to plan for bad weather and other natural disasters, go to “Tips for responding when bad weather strikes.” Also, you can learn the best practices for handling a workplace emergency from preparation to response by participating in the interactive one-day extended webinar “Emergency Management at Work: How to Prepare for and Respond to a Crisis Situation.” For more information, go to http://store.hrhero.com/emergency-bootcamp or call 800-274-6774.