How employees get paid when business is disrupted depends on their classification. Pay decisions must comply with the Fair Labor Standards Act (FLSA) which establishes two categories of employees: exempt and non-exempt. Exemption status also drives eligibility for overtime.
You may remember in 2016 the excitement (or dread) over a new salary level for white-collar exemption. At the 11th hour, this Obama regulation was held up in Court but it didn’t disappear. The Department of Labor (DOL) is likely to propose a new overtime rule by October 2018. The DOL is expected to raise the salary threshold for white-collar exemptions but not as high as the Obama administration had. Many believe the new exemption level will be peg around $33,000.
Winter storms conjure up images of playing in the snow and hot chocolate. Unfortunately for employers, disruption to business leads to questions about pay. Should employees be paid when they can’t go to work because of the weather? It depends on their classification.
They are often referred as “hourly workers” but the FLSA designation is non-exempt (because they are non-exempt from overtime pay). Here the situation is straightforward. Non-exempt employees do not have to be compensated for time not worked, regardless of the reason.
However, employers concerned with keeping their employees’ paycheck whole will allow or require non-exempt employees to use paid leave instead of ducking the pay.
They require a more in-depth analysis.
See how office closure and remote work options affect the pay of exempt employees.
Typically, managers, supervisors and professionals are classified as exempt. They are often referred as “salaried employees.”
Closure – If the business is closed, exempt employees should be paid when the business closes for less than a full workweek. FLSA regulations require that an exempt employee receive a full salary for any week in which partial work is done, regardless of the number hours. When no work is performed for an entire workweek, then an employer may chose not to pay the employee.
An employer can require exempt employees to use accrued leave during a closure but the employer continues to be obligated to pay the full salary. The employer might consider advancing leave if the employee doesn’t have enough accrued time off.
Continuing operations – If an exempt employee does not report to work because of bad weather, the employer can deduct from the employee’s pay for each full-day absence or deduct accrued leave. It’s a good idea to look at your past practices and be consistent from one snow event to another!
Telecommuting – A bad winter storm does not have to shut down productivity completely. Many employees work from home. In this case, compensation is due and the amount will vary based on employee classification:
- Full day pay for exempt even if they only do a couple of hours dealing with emails and phone calls,
- Actual hours worked for non-exempt.
If your workplace can accommodate telecommuting, it is be a good idea to plan for remote work policies in the event of inclement weather or other business interruptions.
Before Mother Nature strikes, be clear on how employees will be paid when business is disrupted. If you don’t get it right this winter, you will need to have an answer when tornadoes hit in the spring and hurricanes menaces in the summer.
If you need help untangling the web of exempt and non-exempt pay regulations, contact me.
I help employers get their HR right.