With the recent hurricanes and tropical storms that swept the nation, many businesses were forced to close shop. If you’re a business owner, you probably have questions about which workers you’re legally obligated to pay during natural disasters and other emergencies.
Before you can take the correct course of action, you must determine if your employees are exempt or non-exempt — and apply any applicable local, state and federal laws related to their status. It’s equally important to create a severe weather/emergency policy for your business. Roughly 44% of U.S. small business owners don’t have a written emergency plan that outlines closing procedures and how pay issues will be handled.
Let’s look at the main legal requirements and policy recommendations regarding employee pay when disasters hit.
Inclement Weather and Non-exempt Employees
According to the Fair Labor Standards Act (FLSA), non-exempt (hourly) employees aren’t paid if a business closes due to extreme weather, unless that business uses a floating holiday to cover it. However, employees are allowed to use paid time off to cover the absence. If not, the absence will go unpaid, because hourly employees are paid only for the hours they work.
How Bad Weather Affects Exempt Employees
Exempt employees, on the other hand, must be paid their full salary for the entire workweek if a business closes, whether they worked the whole week or not. If employers remain open for business but employees choose to stay home (due to transportation difficulties, for example), they shouldn’t be compensated unless they choose to use PTO.
Depending on the business and the policy, if employees can work remotely from home when the business is closed, they should be compensated. But they will need permission to work from home.
A Clear, Comprehensive Policy for Emergencies
Your company will benefit from having a written policy or Emergency Action Plan (EAP) detailing business procedures during emergency situations. The policy should state:
- That the safety of employees is the priority
- What is considered inclement weather
- How employee pay will be handled
- The method for connecting with employees during and after the storm, such as a hotline employees can call to determine when offices will reopen.
It’s important to have a plan for your business in the event of an emergency and understand the legal requirements when handling employee pay. Easily manage employee schedule changes in the aftermath of a natural disaster with TrackSmart Scheduling.