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Paying Employees during Natural Disasters

HR Column
Periodically we use a fictitious legal team at Sunderland Manufacturing (also fictitious) to illustrate challenges real companies face. Sunderland has been hard hit by the recent natural disasters, and the company must determine under what circumstances to pay employees.

The two human resource managers looked haggard with stress and sleeplessness. Shirley and Richard sat somberly in the office of deputy general counsel, Barry Miles, seeking answers.

T he electronics plant in the Virgin Islands is closed because of Hurricane Maria, and 2000 employees can’t come to work,” Shirley began. Barry concealed his surprise. He thought Hurricane Maria had only devastated Puerto Rico.

“Our sales offices in Florida, Alabama, Mississippi, and Louisiana are closed because of Hurricane Nate,” Richard added. “We have employees intermittently working from home, stranded in the office buildings, and taking calls from their cars because they can’t get off the roads due to traffic pile ups.”

“Where is the head of Environmental Health and Safety? He should be here for this conversation,” Barry asked.

Shirley looked downcast. “He’s a California resident and he works for his local fire department.”

“So?” Barry didn’t see the connection.

“So he’s battling the California wildfires and helping victims. All our employees who volunteer as fire fighters and emergency personnel are off work helping with disaster relief within the company or in their communities,” Richard said.

“The question is how do we pay our people?” Shirley asked.

Paying exempt employees when the office is closed

According to the US Department of Labor (DOL), if an employer closes the business due to natural disasters for less than a full work week, the employer must pay an exempt employee's full salary even if:
  1. The employer does not have a bona fide benefits plan;
  2. The employee has no accrued benefits in the leave bank;
  3. The employee has limited accrued leave benefits and reducing the accrued leave will result in a negative balance; or,
  4. The employee already has a negative balance in the accrued leave bank.
Private employers may deduct from an exempt employee's leave bank for full or partial days closed during a work week, provided the employee receives payment in an amount equal to his guaranteed salary. If, however, the business is closed for a full work week, the employer does not need to pay an exempt employee for that week.

Personal absence for exempt employees

If the exempt employee is absent for personal reasons (other than sickness or accident), the employer may make leave bank or salary deductions. The DOL considers an absence due to inclement weather to be an absence for personal reasons. An exempt employee with no accrued leave does not have to be paid for the full days he or she fails to report to work because of inclement weather or other disaster.  

Paying non-exempt employees when the office is closed

Under the US Fair Labor Standards Act (FLSA), non-exempt workers must be paid only for time worked. Therefore, an employer need not compensate non-exempt employees who are not working due to natural disaster, whether it is because the employee does not come in, or because the office is closed. Company policy can dictate whether the non-exempt employee must use available vacation days.

Non-exempt employees who receive fixed salaries for fluctuating hours from week to week must receive their full weekly salary for any week in which any work was performed.

Employees who work remotely

Allowing remote work may help families recover faster and foster goodwill for the company. Whether employees work from home, take calls from stranded cars, or work because they are stranded in the office, they must be paid for that time under the rules discussed above.

Employees in employer vehicles

The DOL or a court would likely find that a stranded employee driving an employer’s vehicle and instructed to safeguard that vehicle is generally entitled to pay for time beyond her ordinary home-to-work commute once her shift begins.

Employees who report for work but are turned away

Some states require employers to pay employees a minimum amount of pay for reporting to work if the employee is then sent home due to inclement weather.

On call and wait time

Power outages are common during natural disasters, and employees may be required to remain at work until power is restored. The FLSA considers employees to be “on call” if they must remain on the employer’s premises and cannot use their time for personal purposes. On call employees must be paid for that time.

Emergency service employees

The Uniformed Services Employment and Reemployment Rights Act (USERRA) governs employees who are part of an emergency services organization. These employees are entitled to job-protected leave upon tendering reasonably timely notice under certain conditions.

Practice tips

  • Ensure uniform application of any pay provisions beyond the minimum standards required by law, to similarly situated employees.
  • Notify employees of the following: Who is and who isn’t permitted to work from home, under what circumstances, whether overtime is permitted, and how to record time worked outside the company’s premises.  
  • For employees who cannot work remotely, consider alternative arrangements like temporary or shared offices.
  • Check with the local workforce commission for additional rules governing locations where a state of emergency is declared.

Sidebar references

9 ways your company can help disaster victims

DOL opinion letter on exempt employees

DOL non-exempt wage and hour fact sheet

FEMA disaster unemployment fact sheet

IRS response for Hurricane Harvey qualified employer plan loans

About the Author

Spiwe PierceSpiwe L. Jefferson is general counsel of ChristLight Productions Ltd., LLC, Lifetime Fellow of the American Bar Foundation, and 2016 Diversity MBA Top 100 under 50 Diverse Executive Leaders. She is a member of the ACC employment and labor, law department management, intellectual property, and litigation sections.

The information in any resource collected in this virtual library should not be construed as legal advice or legal opinion on specific facts and should not be considered representative of the views of its authors, its sponsors, and/or ACC. These resources are not intended as a definitive statement on the subject addressed. Rather, they are intended to serve as a tool providing practical advice and references for the busy in-house practitioner and other readers.