The California wildfires have forced many businesses to shut down operations and work through employment challenges presented by this natural disaster. The following are answers to the most common employment questions which have arisen.
A. Natural Disasters: A company’s obligations to pay its employees for the days the business was closed.
1. Salaried exempt employees
An exempt employee’s absence from work for a period exceeding a full workday or more, and because of personal reasons (other than sickness or an accident), permits an employer to reduce from the employee’s leave bank or dock the employee’s salary for their absence. An absence caused by severe weather or other disaster related conditions can be considered an absence for personal reasons. Exempt employees who do not have leave benefits accrued are not entitled to be paid for full days they failed to report to work because of a disaster condition. The employer is obligated to pay an employee only if he or she is ready and able to work.
Under California law, employers may require employees to use accrued leave time for partial day absences. However, the Labor Commissioner requires employers to provide reasonable notice to employees if the employer will require the use of vacation or paid time off. Such notice should be no less than a full fiscal quarter or 90 days, whichever is greater. The requirement of employees to use their accrued leave time for partial day absences does not violate the salary basis test for exempt employees under California law. Thus, given the notice requirement, employers cannot force employees to use vacation time for absences caused by the fires this week. Employers can recommend or present employees with an option to use the accrued vacation.
2. Hourly non-exempt employees
a. Payment of wages: An employer does not have an obligation to pay hourly non-exempt employees for the days their business was closed. However, an obligation to pay does arise when due to a natural disaster an hourly, non-exempt employee is prevented from leaving the employer’s facility to go home and as a result continues to work in excess of eight hours in a day or 40 hours in a week. General overtime compensation rules are applicable here. Individual company policy will dictate whether the employees are entitled to premium pay during this time.
b. Reporting time pay: Reporting time pay is not required when the inability or failure to provide work results from a natural disaster outside the control of the employer. Although reporting time pay of a minimum of two hours or one-half the employee’s regularly schedule shift is generally required under the California Wage Orders when an employee reports to work but is sent home, an employer is not required to compensate nonexempt employees for unworked but scheduled time when the inability or failure to provide an employee with their scheduled amount of work results from a specific cause beyond the employer’s control. Such causes include, but are not limited to: 1) inability of an employer’s operations to commence or proceed due to threats to employees or property, or because of the recommendation of civil authorities; and 2) an interruption of work caused by an act of God such as a fire.
B. Disaster Related Unemployment Insurance and Federal Assistance
1. Unemployment Insurance: When an employee becomes unemployed during a natural disaster, they can be eligible for either basic unemployment insurance or Disaster Unemployment Insurance (“DUA”). DUA is applicable to those employees who become unemployed as a result of a disaster but who do not qualify for regular unemployment insurance.
DUA is available for “any unemployed worker or self employed person” who lived, worked, or was scheduled to work in the disaster area at the time of the disaster; and due to the disaster: 1) no longer has a job or place to work; 2) cannot reach the place of work; 3) cannot work due to damage to the place of work; or 4) cannot work because of injury caused by the disaster. Benefits are payable during those weeks that fall within the Disaster Assistance Period which begins the first day of the week following the date of the disaster and ends 26 weeks after the date the disaster was declared. The current California fires were declared a disaster on October 24, 2007. Those employees whose regular unemployment compensation is exhausted before the end of the Disaster Assistance Period are subsequently eligible for DUA benefits for the remainder of the period.
2. Federal Assistance: Employees are also eligible for assistance through the Federal Emergency Management Agency (“FEMA”) if they are in an area declared to be a disaster. When advising employees, the following qualifications all must be met: 1) the employee must have losses in an area that has been declared a disaster area by the President; 2) the employee has filed for insurance benefits and the damage to the employee’s property is not covered by the employee’s insurance or the employee’s insurance settlement is insufficient to meet the employee’s losses; 3) the employee or someone who lives with the employee is a citizen of the United States, a non-citizen national, or a qualified alien; 4) the employee has necessary expenses or serious needs because of the disaster; 5) the employee has accepted assistance from all other sources for which the employee is eligible, such as insurance proceeds or Small Business Administration disaster loans.
Monetary assistance is available for serious conditions caused by the disaster, including:1) Disaster-related medical and dental costs; 2) Disaster-related funeral and burial cost; 3) Clothing; household items (room furnishings, appliances); tools (specialized or protective clothing and equipment) required for the job; necessary educational materials (computers, school books, supplies); 4) Fuels for primary heat source (heating oil, gas, firewood); 5) Clean-up items (wet/dry vacuum, air purifier, dehumidifier); 6) Disaster damaged vehicle; 7) Moving and storage expenses related to the disaster (moving and storing property to avoid additional disaster damage while disaster-related repairs are being made to the home; 8) Other necessary expenses or serious needs as determined by FEMA; 9) Other expenses that are authorized by law.
C. Workers Compensation and Disability Insurance
Employees suffering from disaster related ailments may want to consider a workers compensation claim if their condition was caused by an on the job illness or injury. Businesses who continue to operate during this period might also consider contacting the workers’ compensation carrier to determine if any precautions should be taken. Employers should report to the workers’ compensation carrier any claims related to air quality control and closely monitor air quality related concerns.
Individuals who become ill or injured and cannot work, may be eligible for Disability Insurance benefits. Most California workers are covered under the State Disability Insurance program. Covered workers fund this program through a deduction from their wages, and can receive approximately 55 percent of their lost wages, for up to one year, while unable to work.
D. Donation of Vacation Days
During a disaster many employees express interest in donating their vacation, sick, or personal leave to aid victims of the disaster and will want to discuss such donations with their employer. Under California law, accrued wages and PTO time qualifies as wages. Where permissible, based on the Company’s policy, employees could be allowed to cash-in the vacation days or PTO time and donate those monies. However, employers should not make any direct deductions from employee wages for this purpose. Donation of sick days can be more complicated in light of California’s disability laws. The safest practice is to allow employees the opportunity to make any donations of their PTO or vacation pay-outs as a separate transaction altogether. These payments can also be made to qualified tax-exempt organizations which provide relief to victims.
E. State payroll reports and taxes
Employers directly affected by the Southern California Wildfires may request up to a 60-day extension of time from EDD to file their State payroll reports and/or deposit State payroll taxes without penalty or interest. This extension, applicable only to the third and fourth quarters of 2007, may be granted under Section 1111.5 of the California Unemployment Insurance Code (CUIC). Requests for extentions must be received with a postmark date of December 20, 2007, or earlier.