Almost without exception, businesses are faced with the question of whether an exempt employee’s salary can be docked because inclement weather has affected its operations and the employee’s ability to come to work. The question comes to mind particularly for business along the nation’s eastern seaboard during hurricane season when regions are impacted by torrential rain, heavy winds or flooding that make traveling difficult, dangerous or even impossible and which impact orderly business operations.
Answering the question of whether an exempt employee must be compensated for missed work often starts with reviewing the Fair Labor Standards Act’s (“FLSA”). Enacted by Congress in 1938 and occasionally amended since, the FLSA requires employers to: 1) pay non-exempt employees at least the lawful minimum hourly rate for each hour worked; 2) pay non-exempt employees one and a half times the employee’s regular rate of pay for each hour worked exceeding forty hours in a work week; and 3) to keep accurate records of the time worked and the money paid. Businesses which are not engaged in commerce or production of good for commerce are exempt from requirements of the FLSA. Today, it is fair to say that most business come within the purview of the FLSA. Employees such as professionals, executives and administrators who meet certain duties test and who are paid on a salary basis are also exempt from FLSA protection.
Under rules adopted by the United Stated Department of Labor, to meet the “salary basis” an employer must pay exempt employees their full salary for any week in which the employee performs any work without regard to the number of days or hours worked. Exempt employees need not be paid for any workweek in which they perform no work. An employee is not paid on a salary basis if deductions from the employee’s predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. If an employee is ready, willing and able to work, deductions may not be made for time when work is not available. 29 C.F.R. § 541.602(a).
The Department defines the circumstances when deductions may be made from an exempt employee’s salary and still be in compliance with the FLSA: a) absence from work for “one or more full days for personal reasons, other than sickness or disability,” 29 C.F.R. § 541.602(b)(1); b) absence from work for one or more full days caused by sickness or disability “if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary occasioned by such sickness or disability,” 29 C.F.R. § 541.602(b)(2); c) to offset fees received by the exempt employee for jury duty, witness testimony and military service,” 29 C.F.R. § 541.602(b)(3); for “penalties imposed in good faith for infractions of safety rules of major significantly,” 29 C.F.R. § 541.602(b)(4); for “disciplinary suspensions of one or more full days imposed in good faith for infractions of workplace conduct rules,” 29 C.F.R. § 541.602(b)(5); “proportionate part of an employee’s full salary for the time actually worked in the first and last week of employment,” 29 C.F.R. § 541.602(b)(6); and absence under the Family and Medical Leave Act, 29 C.F.R. § 541.602(b)(6).
The answer to the question whether an exempt employee must be compensated for missed work due to inclement weather lies in 29 C.F.R. § 541.602(b)(1). If a natural disaster hits the area in which your business is located and the business is forced to close for less than a full week due to inclement weather, then the rule requires that a “full week salary for any week in which the employee performs any work without regard to the number of days or hours worked” must be paid. 29 C.F.R. § 541.602(a). An exempt employee’s salary cannot be docked for “time when work is not available.” Id.
On the other hand, if your business is fortunate enough to be able to open and an exempt employee chooses not come to work (even if the streets are impassable due to downed trees or flooding), the employee may be treated as having taken an absence for personal reasons unrelated to sickness or disability. Salary deductions in this case will not cause your business to forfeit its FLSA exemption for those employees. A word of caution: deductions can only be made in full day increments. Therefore, if the employee is absent a full day and then part of the next day, then only the full day can be docked; the employee must be paid all wages for the partial day’s work if the FLSA exemption is to be maintained.
Complying with the FLSA is mandated no matter whether trees are downed, electricity in some areas is out or the government has recommended that employees stay home. The FLSA makes it incumbent on the employer to know the wage and hour laws and to comply with them. Congress has made the penalties for violations very expensive, including paying double the amount of money owed to the employee and compensating the employee’s attorney. It is best to get it right!