Pay practices during inclement weather closings
It happens to nearly every company at some point… and for many, multiple times every year. What is it? Inclement weather that forces an office or plant closing. In the North, the usual problem is snow or ice; in coastal areas, it’s tropical storms; in the Plains, floods and tornados. Even in the relatively consistent climate of Southern California, there are occasional hazards such as torrential rain, mudslides and forest-fire smoke that can curtail business activity for some period.
Why is this a matter of concern for company management? First, because unless ordered by a controlling governmental authority, senior management must make the call as to whether closing the office or plant is warranted, and for what interval of time. This can be a gut-wrenching decision, and often must be made during what is normally personal time and on the basis of fairly sketchy information.
Second, having made the decision to close, you now face a thicket of regulations that govern pay practices in such circumstances. Some of these are…
If you close the office, you must pay exempt (salaried) employees for a full day of work; but you are allowed to charge this time against their PTO bank. However, if the business closes for a full workweek, exempts need not be paid at all (they are free to use vacation or other accrued time, if they have it).
If exempt employees cannot or are not willing to come to the office because of the weather, you are not required to pay them. (As a practical matter, however, many employers pay them anyway, or allow employees to use available vacation or PTO to cover the absence.) However, you are required to pay them for a full day if they show up for any portion of that day, even if you didn’t declare it to be a weather emergency.
You may dock the pay of hourly (non-exempt) employees for missed time, whether or not you had an emergency plant closing.
The confusion over exempt classification often leads to Department of Labor fines and class-action lawsuits. Also, improper deductions from exempt employees’ pay – if not caught and reimbursed – can cause those employees to be reclassified as non-exempt, making them eligible for overtime pay …including back pay for two or more years!
Your best defense is to ensure that your employees are correctly classified and that your company does nothing to jeopardize exempt employees’ status. It’s also a good idea to review and publish your policies and practices, so that all of your employees understand how absences or closings due to bad weather will be handled from a payroll and attendance-tracking standpoint.
Departures from routine – such as those caused by bad weather or other hazards – are an inescapable source of uncertainty and stress for employees and managers alike. But with a bit of diligent care, you can minimize those effects and avoid unwanted collateral damage to your business.