Businesses up and down the East Coast will need to make some tough calls next payday as they try to figure out how to handle the days workers didn’t show up or were sent home because of hurricane, earthquake, or both.
The earthquake probably didn’t affect many employers, though those who sent workers home before the end of the day need to look to their state law to see what, if anything, they need to pay their non-exempt employees.
Hurricane Irene, however, affected workers from the Carolinas to New England, and especially in the coastal resorts of Virginia, Maryland, and New Jersey, where Atlantic City’s casinos were shuttered and hotel guests evacuated. In New York City, even if workers wanted to get to work, they found the transit system shut down for the first time in the city’s history.
What this will mean when figuring payroll is not so easy as it might seem.
A similarity with snow days
Exempt workers, for instance, may have to be paid. In some of the East Coast states — Connecticut, Massachusetts, New Hampshire, New Jersey, New York, and Rhode Island — and the District of Columbia, even hourly employees may be entitled to some compensation.
More than a few businesses have experience figuring this out. The situation most commonly arises where snow days occur, shuttering businesses or making it difficult or impossible for employees to get to work. If your company has experienced a snow day, then you know that despite the urgings of public safety officials and governors, quirky laws say it’s to your economic advantage to stay open.
For the rest of you, welcome to the peculiar, contradictory world of public emergencies and the Fair Labor Standards Act. Consider this a basic primer, rather than legal advice. My purpose here is to alert you to the issues to puzzle through, preferably before you start processing payroll.
In deciding whether you legally must pay workers for time they were not present in the office or business, you need to ask five questions:
- Was the business open or closed,
- What was the worker told by the manager?
- Is the worker exempt or hourly?
- Does your state have a “reporting time pay” law? The states listed above do.
- Especially (but not exclusively) for exempt workers, are they allowed or encouraged to work from home and did they on day in question.
What you need to do under FLSA
The first question should be easy to answer. The tricky part is when workers were allowed or encouraged or ordered to go home early. Here, you need to know what the manager said. And that matters mostly for your hourly workers. If they were told or lead to believe they could leave early without penalty, you are bound to pay them.
According to news reports I saw of the earthquake, some people were so rattled by the temblor that they left work. Some left to check on the condition of their home, or to pick up their children from school.
Under the FLSA, exempt employees who left before the end of the day, but who were there at all, must be paid their regular salary. It doesn’t matter that the business remained open all day. The law states in part: “an exempt employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked.”
There are some deductions, such as when the exempt employee calls in sick and takes the whole day off. Then you can deduct a day’s pay. (But note that no deduction is allowed for a worker who reports in, but goes home sick after working part of the day.)
It gets more complicated for businesses that closed due to the hurricane. Here, the Department of Labor provided guidance in a 2005 opinion letter:
If the employer closes operations due to a weather related emergency or other disaster for less than a full work week, then the employer must pay an exempt employee ‘the full salary for any week in which the employee performs any work without regard to the number of days or hours worked’…
Ignoring emergency officials can be advantageous
You can, though, compel an exempt worker to use vacation or leave time for that day off. Another DOL opinion says a full or even partial day off for the emergency closure can be debited from the employee’s vacation or leave bank. If they have none, though, you pay.
I said earlier that the DOL’s opinion of the FLSA rules make it economically more advantageous for some businesses to ignore emergency officials and remain open. Here, from the first 2005 opinion letter, is why:
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… an employer that remains open for business during a weather
emergency may lawfully deduct one full-day’s absence from the salary of an exempt employee who does not report for work for the day due to the adverse weather conditions.
But, if your exempt employee went home early one day, and stayed home the next, even though you remained open both days, the DOL says you can deduct only the full day pay.
All of this is easy enough if your exempt employees do all their work out of an office and never telecommute. How does the picture change if telework is both permitted and routine? Before we get to that, let’s deal with the situation of the hourly workers.
In most locales, they only have to be paid if they actually do work. In New York City, where so many restaurants, retailers and others closed for all or part of Saturday and Sunday, there is no FLSA requirement that they be paid.
So none of them get paid, right? Not necessarily.
Now you really need to know what the managers said and whether everyone knew not to show up for work. New York is a “reporting time pay” state, which means you have to pay a non-exempt employee something if they were scheduled and showed up for work only to discover the place was closed or there was no work.
What about telecommuting exempt workers?
However, if the manager told every worker not to show up (and can document it if necessary), then there is no obligation to pay the hourly workers. Note, though, that if the restaurant closed early one day, sending workers home before the end of their shift, they may be owed minimum pay for that day.
About those telecommuting exempt workers: The issue here is fuzzy. The best advice is that if the job is amenable to telecommuting, and the worker telecommuted in the past, and there is no policy against it, then pay up. Such flexibility is inherent in the FLSA rules that exempt you from having to pay overtime, and track hours for your “salaried” employees.
As you weigh the different legal issues involved in figuring your earthquake and hurricane payrolls, there is another overarching consideration, which the lawyers at Hinckley, Allen & Snyder raised a few years ago in discussing the two DOL opinion letters. That is this:
…whether making such deductions for exempt employees is advisable from an employee morale standpoint. Taking deductions from exempt employees because they would not get through a snow storm and thought they could work remotely from home has the potential to cause severe employee discord.”
My only addition would be to add in the hourly workers as well.