Hurricane Sandy’s Aftermath Implicates Recurring Wage and Hour Issues for Employers

Hurricane Sandy’s Aftermath Implicates Recurring Wage and Hour Issues for Employers

Days of business closures and disruptions caused by Hurricane Sandy have left many employers wondering about the rules governing employee pay when the business must close due to inclement weather. With Sandy barely behind us and winter looming, it is time again to reconsider the wage and hour issues employers face when they close due to bad weather, or give employees the option of staying home. At the federal level, whether an employee must be paid in these circumstances depends largely on the employee’s status as exempt or non-exempt under the Fair Labor Standards Act (“FLSA”). Because the rules are different for exempt and non-exempt employees, employers first must ensure that their employees are properly classified as exempt and non-exempt before they can determine their wage payment obligations when operations are disrupted due to bad weather.

FLSA Exempt Employees

FLSA exempt employees typically are those employees who perform certain managerial, professional and/or administrative tasks and who are paid on a salary basis rather than based upon the number of hours they work. Exempt employees must generally be paid their full salary for any week in which they perform work. Therefore, exempt employees must be paid for days that the business is closed due to inclement weather. When an employer closes early or opens late and an exempt employee performs any work that day, the employer must still pay him or her for a full day’s work. On the other hand, if the business is open and an exempt employee chooses not to report to work (for reasons other than illness) and does not work from home, the employer may dock the employee for a full day’s worth of work. If the exempt employee works at least part of the day from home, however, the employer must pay the exempt employee for a full day of work.

Employers may also require exempt employees to use their accrued paid time off (“PTO”) when the office is closed due to inclement weather. The FLSA does not require employers to provide their employees with PTO in the first place, and the Department of Labor has stated that employers may charge their employees a full or partial day of accrued PTO for employee absence due to inclement weather. Employers wishing to charge their employees PTO in these situations should establish policies notifying their employees that they will be charged PTO.

FLSA Non-Exempt Employees

The analysis is much simpler for non-exempt employees. The FLSA defines non-exempt employees as those employees who are paid based on the actual number of hours they work in a given week. The FLSA requires that non-exempt employees be paid only for the time that they actually work. This means that the FLSA does not require employers to pay non-exempt employees when they do not perform work due to inclement weather, regardless of whether the business is open or closed. However, the FLSA does require that non-exempt employees who perform work from home must be paid for their work, regardless of whether the business is open or closed.

Collective Bargaining Agreements and Other Considerations

The foregoing analysis is limited to employers’ obligations under the FLSA. Employers also must ensure they are not subject to additional wage payment obligations under any union contracts or employment agreements. For example, some union contracts require employers to pay employees a minimum of two or four hours for reporting to work, even if they are sent home within an hour or two of their arrival. Correspondingly, state wage and hour laws may provide greater protections to employees.

View Document(s):