Who Gets Paid on Storm Days?
NEWSLETTER VOLUME 2.7
|February 16, 2024
Who Gets Paid on Storm Days?
When work is closed for bad weather, some employees get paid for the day while others don't. That doesn't seem fair. Why is that?
The answer turns on whether someone is exempt from overtime or not. But why does eligibility for overtime have anything to do with people not working at all? This is a very good question.
Exempt employees don't work by the hour. Instead, they're expected to get whatever needs doing done even if it takes them more than 40 hours in a week or 8 hours in a day. So, when they're working or not working doesn't really matter because the employer isn't tracking their time.
Nonexempt employees do work by the hour and get paid a premium rate when they have to work extra time. The flip side is that if they are not working, they don't get paid—even when the reason is bad weather and they were ready to work.
So exempt employees generally get paid if work is closed and nonexempt employees don't.
Yes, exempt employees generally are paid more than nonexempt employees. And yes, nonexempt employees bear the financial burden of bad weather while exempt employees get paid for not working. When you back up and look beyond wage hour law, it really does not seem fair.
But here's the thing. Your organization can make a different policy than the law as long as it is more beneficial to employees. Compliance is the floor, not the ceiling.
Wage hour law for storm days can be tricky and this is a great discussion of how to figure out payroll.
Despite Punxsutawney Phil declaring an early spring, employers should continue to prepare for weather-related emergencies and their wage and hour implications. As with most of wage and hour-related determinations, employers should be mindful of the distinctions between their exempt and non-exempt workforce when assessing their obligations under the Fair Labor Standards Act (FLSA), and state and local laws, to pay employees as a result of weather-related emergencies.
Salaried Exempt Employees
Under the FLSA, employers may not deduct from the salary of an employee classified as exempt from overtime pay if the business closes for less than a full workweek due to inclement weather. Specifically, the pertinent regulations provide that “[a]n employee is not paid on a salary basis if deductions from the employee’s predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.” See 29 C.F.R. § 541.602(a)(2).
While the “salary basis” regulation allows employers to make deductions from an employee’s salary “when an exempt employee is absent from work for one or more full days for personal reasons, other than sickness or disability,” the Department of Labor has taken the position in at least two opinion letters that an employee’s absence as a result of a business closure does not constitute an absence “for personal reasons” under this exception. See 29 C.F.R. § 541.602(b)(2); opinion letters from October 24, 2005 and October 28, 2005. By contrast, if the business remains open and an exempt employee chooses not to report to work due to inclement weather, the absence does constitute an absence “for personal reasons” and the employer may take a full-day deduction. Notably, the FLSA generally does not permit partial day deductions, so employers must still pay a salaried exempt employee who arrives late due to bad weather or leaves work early to avoid bad weather for the entire workday, even if the late arrival or early departure is for personal reasons. Lastly, while federal law permits employers to require salaried exempt employees to use any accrued paid time off to cover absences resulting from a business closure, an employer may not make any deductions if an employee does not have sufficient paid leave to cover the duration of the business closure. While employers may require employees to exhaust any of their accrued leave, employers cannot make deductions to cover any balance between the duration of the business closure and employees’ accrued leave.
Non-Exempt Employees
Under federal law, employers must pay non-exempt employees for only the time they work. But the inquiry doesn’t end there. Depending on the state and locality in which the non-exempt employees work, laws and regulations regarding predictive scheduling or call-in pay may apply.
Predictive scheduling laws require covered employers to provide employees at least a minimum amount of notice of any changes in their schedule and impose penalties for noncompliance. Similarly, state and local reporting pay provisions require employers to pay employees a minimum number of hours on any day they report to work as scheduled, even if the employer closes the business before the employees perform any work. Notably, some state and local laws, including California, provide exceptions to predictive scheduling laws such as public utilities outages and natural disasters. See IWC Orders 1-16, Section 5(C).
In addition to predictive scheduling and call-in pay, employers may also be on the hook to pay for waiting time—i.e., time during which employers require employees to wait to perform work, such as when a business is determining whether or not to close, as well as for any time employers require employees to remain on premises during an inclement weather event. In the latter scenario, there is a significant legal distinction between employers requiring their non-exempt employees to remain on premises during an inclement weather event versus allowing them to do so such that employees can make their own decision as to whether they want to avoid dangerous elements, such as a hazardous commute. But even if employers permit employees to leave the premises, employers should beware that a court evaluating whether the time employees spend on premises is compensable will scrutinize the extent of the employer’s control over employees while they remain on premises.
Conclusion
Given the unpredictability of weather-related emergencies, employers should take preemptive steps to make sure their employees understand their weather-related emergency policies and expectations. Additionally, employers should implement procedures to communicate any weather-related emergency updates such as business closures or changes to hours of operations. Businesses expecting non-exempt employees to continue working remotely in the event of weather-related emergencies should also implement appropriate timekeeping mechanisms to track the time employees spend performing remote work. Lastly, employers of unionized workforces should consult the collective bargaining agreement and evaluate whether any of its existing provisions should influence their weather-related emergency policies.
Compensation & Pay Equity Law Review
Are you concerned about pay gaps in your organization?
CompAnalyst® Pay Equity Suite can help you achieve and sustain pay equity
