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1. FEATURE STORY:
BAD WEATHER RAISES PAY QUESTIONS
The winter typically brings employee excuses about not being able to make it to work due to the weather. The excuses bring with them the question of whether the employees must be paid.
With non-exempt employees, employers' pay responsibilities are quite clear: You need only pay for hours worked. However, exempt status muddies the water, since exempt employees generally must receive their full salaries for any week in which they do work; their pay does not vary based on the quantity or quality of work. A few years ago, the Department of Labor (DOL) released two opinion letters regarding paying exempt employees in the event of inclement weather (or other disasters). The letters cover both when employees don't work because the business closes and when the business stays open, but employees choose not to go to work.
READY, WILLING, ABLE TO WORK
If a business chooses to shut down, forcing employees to stay home for a day or two, deductions may be made from exempts' leave banks, but not from their salaries. Here's why.
The FLSA prohibits deductions from salary for absences caused by the employer or the operating requirements of the business. If employees are "ready, willing, and able to work," salary deductions may not be made "for time when work is not available." However, if you have a bona fide benefits plan, you may make partial- or full-day deductions from exempts' accrued leave banks without affecting their exempt status, provided they receive an amount equal to their guaranteed salary. You must pay exempts' their full salary if:
1. you do not have a bona fide benefits plan;
2. the employee does not have any accrued leave time;
3. the employee has limited accrued leave time and reducing that leave time will result in a negative balance; or
4. the employee already has a negative balance in the accrued leave bank.
If the business closes for a full workweek, exempts need not be paid at all. Exempts can use vacation or other accrued time, if they have it.
IT'S PERSONAL
More often than not, you will run into a situation where the weather is not bad enough to close the office, but it is bad enough to make employees want to stay home. In situations where employees choose to stay home (rather than are forced to stay home due to a closing), you may make deductions from leave banks or salaries. Here's why.
The FLSA allows full-day salary deductions for absences due to personal reasons, other than sickness or disability. In the DOL's opinion, an absence due to inclement weather, such as because of transportation difficulties, is an absence for a personal reason; it does not constitute an absence due to sickness or disability.
Deductions from leave banks may also be made on the same basis as if the workplace had closed. However, there is a major difference: You do not have to pay employees for full-day absences if they have no accrued leave time, but choose to stay home due to the weather.
The confusion over exempt classification often leads to DOL fines and class-action lawsuits. Make sure that your employees are correctly classified and that your company doesn't do anything to jeopardize exempt employees' status, such as improperly docking their pay, with the Payroll Compliance Handbook.
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