The winter storms have wreaked havoc on some businesses. Some saw a decline in sales, dealt with snow and ice removal, or lost work days due to emergency closings. Employers who had to close an office are facing some confusing compensation questions, such as "If our office was closed due to weather, do we have to pay hourly and salaried employees?"
A BLR legal editor recently fielded this compensation question, explaining the difference between nonexempt and exempt employees based on a Department of Labor Opinion Letter.
Exempt employees. The FLSA does not require employer-provided vacation time. Where an employer has proposed a bona fide benefits plan, it is permissible to substitute or reduce the accrued leave in the plan for the time an employee is absent from work, even if it is less than a full day, without affecting the salary basis of payment, if the employee still receives in payment an amount equal to the employee’s guaranteed salary. However, an employee will not be considered to be paid on a salary basis if deductions from the predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business.
Therefore, if the employer closes the office because of inclement weather or other disasters for less than a full workweek, the employer must pay the employee’s full salary even if:
- The employer does not have a bona fide benefits plan;
- The employee has no accrued benefits in the leave bank;
- The employee has limited accrued leave benefits and reducing that accrued leave will result in a negative balance; or
- The employee already has a negative balance in the accrued leave bank.
Since employers are not required under the FLSA to provide any vacation time to employees, there is no prohibition on an employer giving vacation time and later requiring that such vacation time be taken on a specific day(s). A private employer may direct exempt staff to take vacation or debit their leave bank account in the situation presented above, whether for a full or partial day’s absence, provided the employees receive in payment an amount equal to their guaranteed salary. In the same scenario, an exempt employee who has no accrued benefits in the leave bank account or has a negative balance in the leave bank account still must receive the employee’s guaranteed salary for any absences occasioned by the employer or the operating requirements of the business.
If the employer’s offices remain open during inclement weather or other types of disasters, and an employee is absent for 1 or more full days for personal reasons, the employee’s salaried status will not be affected if deductions are made from the employee’s salary for such absences. An employee who is absent because of inclement weather, such as because of transportation difficulties, is absent for personal reasons. A private employer may require an exempt employee who fails to report to work to take vacation or make leave bank deductions without jeopardizing the employee’s exempt status. When the office is open, an exempt employee who has no accrued benefits in the leave bank account does not have to be paid (i.e., may be placed on leave without pay) for the full day(s) he or she fails to report because of such circumstances as a heavy snow day.
Nonexempt employees. Employers must pay nonexempt employees only for hours worked. If a nonexempt employee misses work, he or she is not entitled to payment for the missed time.
Editor's note: This article was updated on 3/1/2011.