The month of December is here, and depending on your industry, you may find your company in a very busy or fairly slow period. Whether you’re busy or slow, December also brings holiday festivities and the onset of winter weather. In the midst of planning for holiday staffing and preparing for inclement weather, employers that remember these tips will be able to navigate the season more confidently.
Holiday pay policies
December is also an opportune time of year to review your holiday pay policies and ensure they comply with federal and state laws. If your company closes for a holiday, you must first determine whether employees are classified as exempt or nonexempt under the federal Fair Labor Standards Act (FLSA) to know whether they must be compensated for that day.
Nonexempt employees. There is no requirement under the FLSA stating that you must provide paid holidays to nonexempt employees. Nonetheless, many employers choose to provide paid holidays to their nonexempt employees as a benefit. Employers that remain open on a particular holiday may offer overtime compensation to nonexempt employees. However, nothing in federal law requires you to pay overtime if employees haven’t worked more than 40 hours in that week.
Exempt employees. On the other hand, you must pay exempt employees for days when the company is closed because of a holiday. Any deductions to an exempt employee’s salary for an absence caused by the employer or by the business’s operational needs, including an absence caused by a holiday closure, may cause the employee to lose her exempt status because she will not be considered paid on a “salary basis.” In essence, irrespective of your decision to close for a holiday, you should pay exempt employees their regular salary for the workweek in which they perform any work.
Note that some states do place additional restrictions or requirements on holiday business operations.
Inclement weather pay
Winter brings with it the possibility of severe weather. Many employers grapple with the question of how to pay employees when the business is closed because of inclement weather and whether deductions from pay for closures are allowed. These inquiries once again start with an initial determination of whether employees are nonexempt or exempt under the FLSA.
Partial business closures due to weather. When weather conditions cause you to either delay opening your business or to close early on a particular day, the FLSA doesn’t require you to pay nonexempt employees during the partial closure. That’s because employees are unable to provide work during that time frame. On the other hand, if you close your offices for only part of the day because of inclement weather, you cannot make a deduction from an exempt employee’s salary without risking the loss of his exemption.
Note, some states do require minimum payments if employees report to work but there is no work to be performed or there is less work than the employee was scheduled to perform.
Complete business closures due to weather. If you close your business for a full day because of severe weather, you are not required under the FLSA to pay nonexempt employees for that day because they are unable to provide any work for the day. This is the case even if nonexempt employees were scheduled to work that day.
Conversely, you may not take deductions from an exempt employee’s salary for a full-day inclement weather closure or you risk losing the employee’s basis-mean exempt status. You have more flexibility if the closure lasts for one week or more. In that case, you may choose not to pay exempt employees for that week.
Employee absences due to weather. If you have employees who commute significant distances or from rural areas, you may face the situation of the company being open but individual employees being unable to get to work. If you are open for business but inclement weather stops a nonexempt employee from reporting to work, there is no requirement to pay him. You may dock a nonexempt employee’s wages for a weather-related absence because nonexempt employees don’t need to be paid for hours they don’t work.
When you are open for business and an exempt employee cannot report to work because of inclement weather, the rule varies slightly. Specifically, you no longer risk losing the employee’s exempt status if you make deductions from her wages in this situation. According to the U.S. Department of Labor (DOL), when an exempt employee is absent because of severe weather but the business is open, the absence will be considered an absence for “personal reasons.” You may thus deduct that day’s earnings from the employee’s salary without losing her exemption.
Remember that the exempt employee has to take the entire day off because of severe weather for this modified rule to apply. Should the exempt employee simply choose to come into work late or leave early because of the weather, he shouldn’t have a deduction taken from his salary because that would jeopardize the exemption.
Before inclement weather hits, review the rules for paying employees during weather-related closings and when they are absent because of bad weather. If you are proactive, you will set yourself up for a thriving 2018!
Shawntel Hebert is an employment attorney at Taylor English Duma LLP. She regularly represents employers in federal and state courts as well as before various administrative agencies. She may be contacted at firstname.lastname@example.org.