As Hurricane Harvey continues to wreak havoc on Houston, Texas, and surrounding areas, undoubtedly, many businesses have been damaged or destroyed, while others have closed temporarily for safety and security reasons. These businesses may remain closed, or operate with limited hours, for days, weeks, or possibly months. When such closures occur as a result of nature’s forces, what are an employer’s obligations to continue paying its employees?
The third recommendation in Inc.com’s “9 Ways Your Business Can Help Hurricane Harvey's Houston Victims” is “[k]eep paying your affected employees.” From an employee-relations standpoint, this is solid advice and certainly will help those who are facing immediate financial needs. But is an employer legally obligated to continue paying its employees while the business is closed?
Following Hurricanes Ivan, Katrina, Sandy, and others, Jackson Lewis addressed employers’ common questions when such natural disasters strike. See our articles, here and here. In light of Hurricane Harvey, we readdress those questions in this article.
1. When a company closes due to inclement weather, must the company pay an hourly, non-exempt employee for the day(s) when the business was closed?
A: Generally, there is no obligation under federal law or state law to pay non-exempt employees for time not worked. Whether the company requires the hourly non-exempt employee to use his or her vacation days is a matter of company policy. However, several states require employers to compensate non-exempt employees under call-in or reporting pay laws, especially if the employees were not advised that they should not report to work and were denied work upon arrival at the workplace (Texas does not have such laws).
2. What about salaried, exempt employees? Does a company have to pay them when the business is closed?
A: That depends upon whether the business was closed for the entire workweek or only part of the week. The Department of Labor has issued an Opinion Letter stating that if the employer closes the business due to inclement weather or other natural disasters for less than a full workweek, the employer must pay the employee’s full salary even if:
- The employer does not have a bona fide benefits plan;
- The employee has no accrued benefits in the leave bank;
- The employee has limited accrued leave benefits and reducing the accrued leave will result in a negative balance; or
- The employee already has a negative balance in the accrued leave bank. In this situation, private employers may deduct from an exempt employee’s leave bank for the day or days closed during a workweek, whether for full-day or partial-day absences, as long as the employee receives payment in an amount equal to his or her guaranteed salary.
If, on the other hand, the business is closed for a full workweek, the employer does not need to pay an exempt employee for that week.
3. If the business remains open, or re-opens, and a salaried, exempt employee cannot make it to work due to loss of transportation, impassible roads, and so on, may the employer dock his or her pay without jeopardizing the exemption?
A: Typically, yes. The DOL also has addressed this scenario and has stated, “it is the Department’s view that an employer that remains open for business during adverse weather emergencies may make deductions, for full-day absences only, from the pay of an otherwise exempt employee who chooses not to report for work for the day(s) because of the adverse weather emergencies, and treat any such full-day absence(s) as being for ‘personal reasons’ under the applicable regulations.” Employers may not dock the pay of an exempt employee if the employee’s absence is due to “sickness” or “disability.” The DOL, however, holds that an employee’s inability to report to work due to severe weather or hazardous road conditions is considered to be a “personal reason” not falling under either of these two limitations. Of course, with today’s digital workforce, employees often are capable of working from home, even if that is not their normal routine, and employers need to ensure that the pay of exempt employees who are performing work remotely is not being docked simply because the employee did not report to the office. This is particularly important because only full-day absences may be docked. Thus, if an exempt employee works remotely during a given workweek, even if only for an hour, his or her pay cannot be docked.
4. Suppose that as a result of the severe weather, an hourly non-exempt employee is not able to leave the company’s facility and continues to work. Must the company pay the employee overtime for any hours worked in excess of 40?
A. Most definitely. Non-exempt hourly employees who work more than 40 hours in a workweek must be paid overtime. Whether those employees also are entitled to premium pay for working during this time period is a matter of company policy.
5. If an employee reports to work, but then is sent home shortly thereafter because of inclement weather, does the company have to pay him or her any minimum amount?
A. As mentioned above, that depends on whether the state in which the employee works has what are known as reporting laws. Reporting laws require employers to pay for a minimum number of hours once an employee reports to work. Otherwise, companies are free to establish their own policies in this respect.