By Carrie B. Cherveny, Esq.

Between January 1 and July 9, 2019, the United States experienced six weather and climate disaster events – specifically severe storms and floods. Each resulted in losses of more than $1 billion. This has been on top of increasingly deadly wildfires, which in California last year caused $400 billion in damages overall and nearly 100 deaths in the Paradise camp fire alone.

If you were among the employers impacted by these events you may have asked: “Do I still have to pay my employees?” Unfortunately, there is no bright-line answer. The employer’s obligation to pay employees during a shut-down depends, in part, on the employee’s Fair Labor Standards Act (“FLSA”) classification (i.e. exempt or non-exempt). The employee’s job duties will determine whether the employee is exempt or non-exempt under the FLSA.

Exempt Employees

The general answer is that employees that are exempt under the FLSA must be paid an entire week’s salary if they perform any work during the workweek. Unless your business is shut down for more than an entire work-week, your exempt employees are generally entitled to be paid for the entire week in which they worked.

  • One approach employers have considered is to require salaried employees to apply vacation or leave balances for the days not worked. However, the DOL has disapproved of this practice, so employers will do so at their own risk.
  • Another approach could be to reduce your exempt employees’ salaries on a go-forward basis if you reasonably anticipate those employees will be working reduced weeks for an extended period of time. Employer must be sure that they do not reduce an exempt employee’s salary below the FLSA minimum salary amount (effective January 1, 2020 annualized minimum salary $35,568). This approach may create morale issues. Employers should give it careful consideration before they implement such an approach. . Additionally, if you have a contract with a salaried employee where the salary term is definite, you will not be able to adjust the salary downward without the employee’s written consent and an amendment to the agreement.

Non-Exempt Employees

  • An hourly employee must only be paid for work he or she actually performs. Therefore, if your business is shut down as a result of a hurricane or other natural disaster, you generally do not have to pay nonexempt employees for any hours not worked (with a few exceptions). However, if your employee handbook contains any language or policies to the contrary, then you may be obligated to follow those policies. Likewise, be sure to review your policies and handbooks to ensure they do not contain anything that could give rise to a contract or quasi-contractual claim. Finally, make sure that you do not have an actual employment contract with the employee that could govern the terms of his or her wage payments.

There are other complexities associated with the impact of natural disasters on employees’ compensation:

  • Unemployment: If your business is forced to close due to the disaster, your employees may be eligible for unemployment wage replacement benefits. However, unemployment compensation laws vary by state. In some cases, employers provide employees with financial assistance. Generally, providing additional financial assistance to employees who receive unemployment benefits will not jeopardize their benefits as long as the employee is not providing a service for the financial aid. Be sure to check your state’s unemployment laws to be certain.
  • Final paychecks: Employers remain obligated to pay employees event if the business must close and all payroll records are destroyed. Employees who worked the week before the disaster must receive at least minimum wage and overtime for all hours worked.
  • Cleanup work: Employees may volunteer to assist the organization in cleanup and recovery efforts after the storm. However, the employer must compensate non-exempt employees (including any applicable overtime) for any work performed.

Terminations: An employer that chooses to terminate an employee who refuses to come to work to prepare for a storm or fails to return to work after a storm may be problematic. For example, the OSHA General Duty Clause requires all employers to provide a safe working environment for employees. If requiring employees to work puts them in harm’s way (if your workplace is not yet safe/secure) you may face OSHA issues. While in most states employment is “at will” (meaning employers may fire an employee for any reason so long as it is not an unlawful reason) you should check with legal counsel before terminating an employee to ensure laws such as FMLA, ADA, and OSHA are not implicated.

Disaster-related injuries: Qualified employees affected by a natural disaster may be entitled to leave under the FMLA for a serious health condition caused by the disaster if they meet the criteria for an employee’s own serious health condition under the FMLA. Additionally, employees affected by a natural disaster who must care for a qualified family member (such as a child, spouse, or parent) with a serious health condition may also be entitled to leave under the FMLA. Remember, employers subject to the FMLA must comply with the Act regardless of other circumstances such as a hurricane or other natural disaster. Additionally, the Americans with Disabilities Act requires employers to provide a reasonable accommodation to an employee to perform the essential functions of the job. The employer does not have to create a new job for the employee or displace an employee in another position. However, the obligation to identify a reasonable accommodation to perform the essential functions of the job remains regardless of the hurricane or other natural disaster.

Military obligations: USERRA prohibits discharging, denying initial employment, denying promotion, or denying any benefit of employment because of a person’s membership, performance of service, or obligation to perform service in uniformed service. Employees do not have any time limit within which they must provide notice. Likewise, notice may be provided by the employee or an officer of the military branch.

HUB International’s team is available to work with you on a diverse range of HR needs, from risk management and regulatory compliance to benefits strategy, program design and workplace culture.

Access our Crisis Resource Centers for additional guides, tips and information to help you prepare and respond to catastrophic events.