Hurricanes, Tornadoes & Wages: How Does Employee Pay Work During a Natural Disaster?
This week marks the one year anniversary of Hurricane Sandy and serves as an important reminder for employers to ensure that their businesses are prepared to handle a natural disaster. Understandably, in the days following a natural disaster, it is easy for an employer to overlook federal and state wage and hour laws because the employer is often focused on repairing and restoring the business to get back up and running as soon as possible. However, wage and hour obligations are not waived during natural disasters, and as such, employers must be mindful of their obligations. The effect of a natural disaster on wage and hour obligations depends on whether the employee is exempt or non-exempt under the Fair Labor Standards Act (“FLSA”).
The following questions commonly arise in the wake of a natural disaster.
- If my business is closed, am I required to pay exempt employees?
If an employer’s business is closed for less than one week, an employer must pay exempt employees their full salary. An employer may deduct days from the employee’s personal time off (“PTO”) or vacation bank, provided that the exempt employee receives a payment equal to his or her regular weekly salary. However, employers should be cognizant of provisions in collective bargaining agreements or employee contracts that limit the right of an employer to deduct PTO or vacation time. If a business is shut down for one week or more, an employer does not need to pay an exempt employee’s salary provided that no work was performed during any week. If any work was performed, an exempt employee must be compensated for the entire workweek or workday, as applicable.
- What happens if my business is open, but my exempt employee can’t get to work?
If an employer’s facilities are open, but an exempt employee is unable to get to work, an employer may lawfully deduct a full day’s pay from the employee’s salary provided that the employee performs no work. Under the FLSA, the latter absences are considered voluntary and personal. Alternatively, an employer may make deductions from an employee’s PTO or vacation bank. If an exempt employee performs any work, however, the employee must be compensated for the entire workweek or workday, as applicable.
- What if I send my exempt employee home early?
If an exempt employee attends work but is later sent home early due to inclement weather, the exempt employee must be paid for the entire day.
- What if my exempt employee works from home or from a different location?
It is very common in today’s workplace for an exempt employee to “telecommute” or work from home in the event that a business facility is closed. For example, if an exempt employee makes calls, checks voicemails, or reads and responds to e-mails, an employer may be required to pay the employee for the full workday. When an employer knows or has reason to believe that the employee is continuing to work and that the employer is benefiting from the work, the employee must be paid. In sum, if an exempt employee performs any work whatsoever, regardless of where, the employee must be compensated for the entire workweek or workday, as applicable.
If a business is closed, non-exempt employees do not need to be paid since non-exempt employees are paid based on hours actually worked. These same rules apply to when a business is open, but a non-exempt employee is unable to get to work. Employers should be mindful, however, of provisions in collective bargaining agreements that require non-exempt employees to receive compensation in the event of a natural disaster. Further, if a non-exempt employee is “on call” during a natural disaster, he or she must be paid for every hour on call since the employee is not able to use this time as he or she chooses. Additionally, some non-exempt employees receive a fixed salary for fluctuating workweeks. An employer is required to pay these employees their entire fixed salary for any week in which any work, even as few as three hours, is performed.
- What if I send my non-exempt employee home early?
Whether non-exempt employees are entitled to compensation for days they come to work but are sent home early varies by state law. In New Jersey and New York, for example, non-exempt employees must be paid some minimum level of pay (“call-in pay”) if they show up to work but are sent home early. In New Jersey, the minimum level of pay is considered one hour at the applicable wage rate. In New York, if a non-exempt employee reports to work at the request of his or her employer, the employee must be paid the lessor of four hours of work or the number of hours in the employee’s regularly scheduled shift at the basic minimum hourly wage. Consequently, employers should be mindful of the different state requirements in determining the call-in pay required by law. Further, if an employer alerts their non-exempt employees of a closure, call-in pay is not required. For this reason, it is important that employers have adequate methods of alerting employees of workplace closures.
- What if my non-exempt employee works from home?
If an employer permits a non-exempt employee to telecommute or work from home, the employer must pay the employee for that time. For example, a non-exempt employee who performs overtime while telecommuting must be compensated regardless of whether the overtime was approved in advance. There is an exception to this general rule if the non-exempt employee works for an insignificant or “de minimis” amount of time. For example, when a non-exempt employee spends less than ten minutes checking work-related emails, the employee is not entitled to compensation.
- What if I am unable to pay my employees on time because of the natural disaster?
Most states have laws that require employers to pay employees within a certain period of time. Additionally, some states impose financial penalties on an employer for each day a paycheck is late. For this reason, employers should have contingency plans in the event that their primary payroll strategy is disrupted. In past disasters such as Hurricane Katrina, however, governmental agencies have relaxed certain reports and paperwork deadlines.
*The author would like to acknowledge Samantha Koopman for providing assistance with the research and writing of this article.