Irene’s effect on your payroll
Arthur J. Robb
Irene has come and gone and many are dealing with the aftermath. What does the Fair Labor Standards Act (FLSA) say about payment of wages to employees whose hours have been affected by the storm?
The answer will vary depending upon whether the employee is exempt or non-exempt. (If you have questions about the exempt status of your employees, consult with counsel.)
Non-exempt employees
Under the FLSA, non-exempt employees must only be paid for time actually worked. Therefore, employers are not required to pay non-exempt employees who fail to report to work as a result of the storm. Likewise, employers are not required to pay non-exempt employees when the business itself is closed as a result of the storm, thereby preventing employees from working. In the latter case, however, there may be state law obligations that apply—many states (like New York) have "show-up pay" laws requiring employers to pay non-exempt employees whenever the employee reports to work as required or requested by the employer, even if no work is available. (Show-up pay is also a separate topic. If you have questions about show-up pay, consult with counsel).
Exempt employees
Different rules apply to exempt employees. In general, exempt employees must be paid their full salary for any week in which they perform any work, unless a deduction is specifically permitted under the FLSA.
The FLSA does permit deductions for full-day absences taken for “personal reasons.” So, when is an Irene-related absence considered taken for “personal reasons"?
If the employer is open for business, and the exempt employee chooses not to, or is unable to, report to work because of the storm, the U.S. Department of Labor (DOL) considers the absence to be due to personal reasons. Thus, the employer may take a full-day deduction for the absence. But employers may not take partial-day deductions, and accordingly, may not dock exempt employees for Irene-related lateness.
If, however, the employer closes the business due to the storm, the exempt employee’s absence would not be for “personal reasons.” Therefore, states the DOL, no deductions from salary may be made if the employer closes operations-this is considered an impermissible deduction for absences occasioned by the employer or the operating requirements of the business.
In either case, the DOL notes that an employer may require its exempt employees to utilize accrued paid time off to cover the lost time.
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Impermissible deductions can result in a loss of exempt status, which can further result in significant exposure to wage-and-hour claims. If you have any questions about these rules, speak with your employment law attorneys.
This Update is not intended to be legal advice, but rather is intended to inform the reader of problem areas and recent developments in labor and employment law. If legal advice is required concerning a particular matter, your attorney should be consulted.