Winter is in full swing, and about the time the first winter storm hits, employers start calling us with questions about how to handle pay-related situations involving absences for bad weather. Employers often ask us, “How do I pay employees when our office is closed for bad weather?” or, “What about when employees choose not to come to work in bad weather, even though we stayed open?” These issues are, of course, important to understand during winter months – but it is good to understand that weather-related absences can happen all year round – be it related to snow, ice, rain, tornados, or hail.
Here’s an overview of how to handle some of the common pay-related issues involved with inclement weather.
1. Paying non-exempt employees
Let’s start with pay-related problems for non-exempt employees – that is, your non-salaried, hourly employees who do not qualify as exempt from overtime compensation under the federal wage law, the Fair Labor Standards Act (“FLSA”). Non-exempt employees’ absences are the easiest to understand. The FLSA only requires you to pay non-exempt employees for actual hours during which they do work. This means that if a non-exempt employee chooses not to come to work because of bad weather – whether that employee misses an hour of work or several days – you do not have to pay that employee for the time missed because he or she was not actually working. This is true even if your workplace closes and the employee is otherwise ready, willing, and able to come to work. You do not have to pay a non-exempt employee unless he or she performs work. This includes situations in which an employee reports to work, your workplace ends up closing, and the employee is sent home. You are only responsible for paying hours actually worked.
2. Paying exempt employees
Paying exempt employees for weather-related absences is a little more complicated. Common exemptions include the professional, executive, and administrative exemptions. Exempt employees are generally paid on a salaried basis and, as the name implies, are “exempt” from receiving overtime compensation.
In order to maintain the exemption status for an exempt employee, the FLSA requires employers to pay them on a “salary basis” above a minimum amount (usually $455 per week). They must be paid the full salary for any week in which the employee works without regard to the number of days or hours actually worked. When an employer makes deductions from the exempt employee’s salary, such as for absences of any kind, that employer can risk losing the exemption – meaning that it must keep time records for the employee, pay him or her on an hourly basis, and pay overtime compensation for time spent working in excess of 40 hours. There can also be penalties associated with misclassifying an employee as exempt and making improper deductions from an exempt employee’s salary.
However, there are several situations in which an employer might want to make a legitimate deduction from an exempt employee’s salary.
A. Paying exempt employees for partial-day absences
First, you need to distinguish between your exempt employees’ full-day versus partial-day absences. As a general rule (to which there may be limited exceptions), when an exempt employee misses only part of a day of work (such as for a weather-related issue), you are not permitted to deduct from the employee’s salary (other than by substituting the employee’s vacation or paid time off, as discussed in Section 3, below). This is true both when your workplace closes for bad weather and when an exempt employee chooses not to work. For instance, if an exempt employee reports to work and then decides to leave at noon due to bad weather (or the entire workplace closes), you must pay the employee for the entire day. Or, if an employee elects not to work for a day and a half (one full workday and half of a second workday), you cannot deduct two full days of salary from that exempt employee. You may (as described below) take full-day deductions from an exempt employee who voluntarily misses work for bad weather. In that situation, you could make a single full-day deduction from the employee’s salary, but you cannot deduct a second day for the partial-day absence.
B. Paying exempt employees when your office closes
When your workplace closes its operations, you are forbidden from taking deductions from your exempt employees’ salaries in any increment. An employee is no longer paid on the required “salary basis” if the employer makes a deduction from an employee’s salary for absences “occasioned by the employer or by the operating requirements of the business,” according to the Department of Labor (“DOL”). The DOL has explained, “If an [exempt] employee is ready, willing, and able to work, deductions may not be made for time when work is not available.” This includes times during which the business is closed due to bad weather. It also includes both full-day and partial-day absences “occasioned by the employer.”
C. Paying exempt employees when they elect not to work
When an exempt employee chooses to stay home from work in bad weather – as opposed to the entire workplace closing – you are permitted to take full-day deductions from an exempt employee’s salary. As the DOL has determined, “Deductions may be made ‘when an exempt employee is absent from work for one or more full days for personal reasons, other than sickness or disability.’” The DOL has specifically determined that “personal reasons” include an employee’s choice not to report to work during bad weather or other disasters. But, remember, this can only be a full-day deduction. If an employee misses only part of a day, that day cannot be deducted.
3. Substituting vacation or paid time off for weather-related absences
The FLSA does not require employers to provide employees with vacation or other paid-time-off benefits. As such, employers have a certain amount of liberty to require or permit employees to substitute their vacation time or other paid time off during absences. Whether exempt or nonexempt, and whether for full-day or partial-day absences, you may require or permit employees to substitute their vacation or paid time off for weather-related absences. This includes times when the workplace closes or when the employee merely chooses not to report to work. Most employers who want to require or permit employees to substitute vacation or paid time off will have a policy stating so, such as in the employee handbook.
However, remember that if an exempt employee does not have available vacation or other paid time to substitute, that employee must receive his or her full salary when a partial-day absence is involved. But, also keep in mind that if an exempt employee is absent voluntarily (i.e., your workplace stays open) and has vacation or paid time off available, you may require or permit the employee to substitute that vacation or paid time off for BOTH full- and partial-day absences.
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No matter what type of weather-related absence you are handling – for an exempt or nonexempt employee or for a voluntary or involuntary absence – it is important for your employees to understand your expectations about attendance and your policies on compensation. We recommend having a weather-related absence policy that covers the details in this E-Brief. This can be a stand-alone policy or memo to employees or a policy in a handbook.
If you have any questions, please contact one of Woods Aitken's Labor and Employment attorneys.
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