Natural Disasters Don’t Have to Become Payroll Disasters

Hurricanes, wildfires, and earthquakes, oh, my! Not to mention tornadoes, tsunamis and mudslides. Coming soon: blizzards and ice storms. Sometimes it seems it’s a wonder we can keep our businesses open at all.

Business owners and their dedicated employees are a resilient bunch, but for even the most determined of us, the time may come when we have to close our offices for a period of time following a disaster.

Right here in my own (relatively small) town we had two businesses awhile back that had to close for an extended period. One restaurant suffered a fairly significant kitchen fire; the other, also a restaurant, was hit by an airplane. (I know, right? Remind me sometime to tell you that story.)

In both cases, the businesses had excellent insurance and healthy cash reserves. They both were able to keep paying their employees while they were rebuilding, which gained them a lot of positive press and worker loyalty. Both businesses reopened and continue to thrive to this day, so a happy ending for everyone all around.

In today’s connected environment, it may be possible for a business to remain at least partially operational even when the actual office is inaccessible. Thanks to the Internet and smartphones, it’s possible for some employees to work remotely. But not all jobs are suitable for remote work. And not all businesses enjoy the luxury of being able to pay employees for not working.

Of course, there are laws addressing when a business that’s closed due to a disaster has to pay its employees. Ignoring these rules can leave you open to a double whammy — not only do you get hit by the disaster itself, but also by possible wage and hour lawsuits or a Department of Labor audit. Not a good thing at all!

Let’s see if we can answer some of the most common questions.

Do I have to pay my employees if the office is closed all week?

It depends on whether they’re exempt or non-exempt employees. (For more information on employee classification, check this article.) It also depends on whether they work during the week, say, answering emails, checking voice mail and returning calls from home.

  • For exempt employees who work at all during the week, you must pay them their full weekly salary, even if they only work for a few hours, even if the work is done remotely.
  • You do not have to pay exempt employees who do not work at all during the week.
  • For non-exempt employees, you must pay them for all the time they work. The law does not require you to pay them for time they did not work.

What about if the office is open and the employee doesn’t come to work?

  • If an exempt employee works every day your office is open, even if for just an hour or two, you must pay them their full salary for the week.
  • If your office is open and an exempt employee does not report for work at all that day (whether in your office or remotely), you can consider them absent for personal reasons, and you don’t have to pay them for that day. You cannot dock their pay in increments of less than a full day, so if they do any work during the day, you must pay them for the full day. (You can require them to take vacation or PTO to cover the absence; see the next question below for more detail.)
  • For non-exempt employees, the law requires you to pay them for the time they actually work. It doesn’t matter if the work is performed in your offices or if they’re working from an alternate location (a remote office, their home, an off-site emergency location, etc.).

Can I make employees use accrued vacation, leave or Paid Time Off (PTO) to cover time off due to the disaster?

  • You can opt to require them to use vacation or paid time off (PTO) during the period of time the office is closed. This means they’d receive their standard paycheck regardless of whether they are able to work, and applies to both exempt and non-exempt employees.
  • BUT, if exempt employees work at all during the week, remember you must still pay them their guaranteed salary even if:
    • Taking leave for the full time the office is closed will cause a zero or negative accrual balance.
    • They don’t have any accrued leave.
    • They already have a negative accrual balance.

Are there any times when I might have to pay a non-exempt employee who didn’t work?

Generally speaking, it doesn’t matter whether your offices are closed or open: you don’t have to pay non-exempt workers if they aren’t working. But there are some possible exceptions:

  • If there’s a collective bargaining contract or a provision in your state or local laws that says otherwise.
  • If you don’t decide to close your offices until after some workers have already showed up. Depending on your state or local laws, in such a case you might be liable for reporting time pay.
  • If you require non-exempt employees to be on-call during the emergency, you could be liable for on-call pay. Whether this is the case depends on the situation, so be sure to consult with your employment law attorney to verify if you do need to pay for on-call time.

What can I do to help my employees keep their spirits up?

Employees are humans. When their community suffers a disaster, they’re bound to feel a host of emotions: distress, anger, despair, confusion, etc. There are things you as a business owner or manager can do to ease your workers’ stress. As with the two restaurants in my town, this can earn you a great deal of employee loyalty as well as good publicity in your community.

Here are a few ideas to help build employee morale while the community rebuilds infrastructure:

  1. If possible, pay all your workers for the time they would have worked. This is especially important if you’re closed for only part of the week — exempt employees would receive their full week’s salary while non-exempt workers would only get paid for the days the office was open.
  2. If you can’t afford to pay workers for time they aren’t working, offer no-interest loans or payroll advances to help them cover expenses related to the disaster. Be sure to document the loan or advance properly including a repayment agreement. Also consult with your attorney to make sure you’re complying with IRS rules and the provisions of the FLSA, especially if repayment will be deducted from employee paychecks.
  3. Relax or temporarily enhance your vacation/PTO policies. For instance, you can ease restrictions on things like required notice periods, and allow affected employees to take advances against future vacation/PTO.
  4. If you have multiple locations, allow employees who were not affected by the disaster to donate unused vacation or PTO time to a “bank” for affected employees.
  5. Relax your attendance policies. Allow workers leeway to take unpaid time off to deal with personal issues.
  6. Identify remote work opportunities. Can some of your employees work from home, a temporary residence or office, or one of your other locations?
  7. Remind employees of your Employee Assistance Program. Encourage them to take advantage of it to help them through the crisis. (And take advantage of it yourself, as well! Don’t forget: you’re under the same stresses as they are.)

Wrapping It Up

Disasters can strike anywhere, any time, and their aftermath can be stressful for everyone. Having plans in place to ensure your workers are paid correctly under the law — and ways you can help them get through the crisis — will reduce your (and their) stress when the time times.

One good way to make sure you track employee work time, even if they’re working remotely, is to use an online time and attendance solution such as AcroTime® Workforce Management. With AcroTime, your data is securely stored in an off-site data center, accessible even if your office is off-limits. You can easily and economically manage scheduling, track employee work time (even for a workforce distributed across a wide geographical area), process payroll, keep track of accruals and a host of other payroll and HR-related tasks that could otherwise prove difficult or impossible to manage.

Contact Acroprint today to learn more about AcroTime, schedule a live interactive demo or start your free 30-day trial.

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By |2018-02-21T00:58:03+00:00October 6th, 2017|Newsletter Archives|Comments Off on Natural Disasters Don’t Have to Become Payroll Disasters