BFV Perspectives, Corporate Matters, Sports Fans Guide 2 HR, | May 30, 2014

When the Office Closes: To Pay or Not to Pay?

It may be difficult to think about this past winter as the mercury makes its ascent to the balmy spring and summer temperatures to which Atlantans have become accustomed. However, it was not too long ago when Georgia endured one of its most severe winters in recent history, including a January snowstorm that paralyzed the city of Atlanta for several days. During this time, with Atlanta’s streets in ice rink condition, most non-emergency Atlanta-area businesses closed their offices. While many businesses reopened later in the week, the challenging driving conditions made it difficult for many employees to navigate their way into the office.

Although the January snowstorm could be dubbed a “once-in-a-generation” occurrence, the reality is that Georgia employers will undoubtedly again face a situation where they will be forced to close or alter their operations or where their employees’ ability to report for work will be impacted. It might be another weather-related situation, such as extremely severe storms or even tornados and flooding. Or it might be some other unpredictable emergency or catastrophic event.

Given the experience of this January’s snowstorm, employers should familiarize themselves with how their obligations under the Fair Labor Standards Act (“FLSA”) may be impacted by office closures due to inclement weather or other factors. This article is intended to provide a short briefing on those obligations. The starting point for analyzing an employer’s obligations under the FLSA is the employee’s classification.

Non-exempt Employees
When a business is closed due to inclement weather, an employer does not need to pay non-exempt employees wages. This is also true if the business opens and the employee cannot report for work due to weather conditions. If employees want to be paid for the day, the employer may require such employees to use paid time off, vacation, or personal days.

Exempt Employees
Exempt workers are a different story. Unless the employer closes operations due to a weather- related emergency or other disaster for a full work week or more, than the employer must pay an exempt employee “the full salary for any week in which the employee performs any work without regard to the number of days or hours worked” because “deductions may not be made for time when work is not available.” See 29 C.F.R. § 541.602(a). However, nothing in this rule restricts an employer from requiring its exempt employee to use paid time off or vacation or personal days for the days when the business is closed, so long as the employer is paying the exempt employee the full salary. This of course means that if the exempt employee does not have paid time off or vacation or personal days, he or she would still have to be paid his or her full salary. Finally, if a business is open but an exempt employee cannot report to work for an entire day due to inclement weather, the employee may be docked the day’s pay.

The above are the basics of an employer’s FLSA obligations when inclement weather strikes. Of course, multi-state and national employers should be aware that some states have “reporting time pay” laws, which require that employers still pay non-exempt employees who report to work but are sent home, for whatever reason. These laws must also be considered when extreme weather conditions result in business closures.

Compliance with these obligations is extremely important given the risk of jeopardizing FLSA exemptions. Employers are strongly advised to consult with counsel to ensure they are compliant, and to seek counsel’s assistance if they believe they may have improperly deducted pay from their exempt employees. Taking the appropriate steps to rectify an improper deduction can avoid having an employee be reclassified from exempt to non-exempt (and therefore becoming eligible for overtime pay). Employers are also advised to have written policies communicating their businesses’ policies with respect to office closings and compensation in the event of employee absences, and to communicate those policies to their employees.

Yogi Berra once said, “It’s tough to make predictions, especially about the future.” Georgia employers cannot predict the weather, but they can take steps to ensure they remain in compliance with all of their legal obligations when inclement weather forces their businesses to close.

BFV Perspectives, Corporate Matters, Sports Fans Guide 2 HR, | May 30, 2014
Neal F. Weinrich
Neal F. Weinrich

Neal Weinrich knows noncompetes and trade secrets inside and out. A shareholder at Berman Fink Van Horn, Neal counsels clients in all industries on matters involving restrictive covenants, trade secrets and other competition-related issues.