As Hurricane Dorian moves up the United States’ eastern coastline, we thought it would be a good time to discuss what happens to employee wages if a business needs to shut down due to a natural disaster.
It is important to know what employers are required to do in these situations regarding wage and salary payments. And as it is with HR, the answer falls squarely in the gray area we call, “it depends.” To begin, employers must examine the facts and circumstances causing the employee to miss work.
The (Federal) Fair Labor Standards Act (FLSA) is the law that governs employer requirements in terms of wages and work hours. A natural disaster does give employers some leeway in terms of FLSA requirements, however, the employer must take guidance from the FLSA regarding its employees exempt or non-exempt classifications.
Non-exempt employees, under the FLSA, are required to be paid for hours actually worked. Therefore, if an employer is unable to provide a non-exempt employee with work due to a natural disaster, the employee, by law, does not need to be paid. Though, if a non-exempt employee does any remote work (from home or elsewhere) when the company is officially closed, he or she must be paid for their time. There is, however, an exception: If an employer has non-exempt employees who are paid a fixed salary for fluctuating workweeks, and the employees do any work during the week, they must still be paid.
When an exempt employee performs any work during a week, he or she must be paid a full salary regardless of the number of days or hours actually worked. However, if the exempt employee doesn’t work and the company is closed a full week due to a natural disaster, exempt employees (under FLSA) need not be paid. In fact, this holds true even if the employee is willing to work.
Deductions may not be made for times when work is not available. In other words, if the company closes operations for a day or two (yet the employee is able and willing to work), they must be paid. The opposite would be true if the company were closed less than a full work week, but the employee was unable to report. In that instance, if the exempt employee is absent for one or more full days, dictated by personal reasons, deductions may be made.
Employers should always remember that if an exempt employee performs any work in a day, even answering one email or call (something that may seem rather insignificant), they must be paid their full salary.
If Covered Under a CBA
If a company has employees covered under a collective bargaining agreement (CBA), it is important to review the CBA in order to determine if there are provisions requiring employees to be paid (even if the company is not required to pay under the FLSA).
Note: In cases of business closure, employers can determine if employees may take advantage of accrued time off. This applies equally to both exempt and non-exempt employees.
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*Be advised that the information contained in this article is intended for educational purposes and to provide a general understanding of the law, not to provide specific legal advice.