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When Disaster Strikes, How Are Employees Paid?
By: Michelle Higgins

Tornado, blizzard, wildfire, or workplace violence ... any of these disasters (natural or otherwise) could bring business to a halt.

Hopefully your company never has to face a disaster, but if it does, are you prepared?

Companies often analyze their readiness with evacuation plans and emergency procedures. But, what if your company had to shut down for weeks, or even months? How would your employees get by financially, and what are your legal obligations to pay them?

Exempt employees
Employees who are classified as exempt generally need to be paid their full salary for weeks in which any work is performed. There are exceptions, however.

If a company is open for business, but an exempt employee stays home (and performs no work), then the employee would not need to be paid.

Absences taken in full-day (not partial day) increments can be deducted from their salary. They also wouldn’t need to be paid if the company shuts down for a week or more.

Exempt employees do have the option to use vacation or PTO to cover their absences financially.

If exempt employees have the capability to work remotely (think manager or a team leader) in the event of an emergency, consider having them keep track of their hours worked. Companies might have other pay obligations under state laws, contracts, or union agreements.

Nonexempt employees
Employees who are classified as nonexempt (which all employees may be classified as regardless of job duties) generally don’t need to be paid for time in which they’re not working.

If a company shuts down for a week following a disaster, employers would generally not be required to pay nonexempt employees. If applicable, employees may use vacation or PTO to supplement their income during a shutdown.

If a shutdown continues to a second week or more, employees might become eligible for unemployment benefits. Check your state’s unemployment law for details.

Companies should keep in mind that state or local laws often impact wages. For instance, some states (like California) have laws requiring employees to receive some pay for reporting to work. In these states, if an employee comes to work and is sent home, he or she might need to be paid partial wages.

Other states have advance-notice scheduling rules that require employers to make employees aware of work schedules a certain number of days in advance.

Employers should brush up on state or local laws that affect their places of business.

Be prepared
As the saying goes, the best defense is a good offense. Walk through what would happen if your company had to shut down for a week or more. Consider such things as:
  • Which employees can work remotely?
  • How would you track their time?
  • What would a communication plan look like?
  • What’s the best way to document these procedures?
  • How would you tell employees they need to use PTO following a disaster?
  • Could the company afford to pay employees without them having to use PTO?
Hopefully you’ll never have to implement the answers to these questions. Having a plan in place, however, will help alleviate some stress if disaster strikes your company.

 
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