There’s no escaping that winter is coming, and with it, snow, ice, sleet and freezing temperatures. Inclement weather can shut down offices or cause employees to miss work, but the Fair Labor Standards Act (“FLSA”) never takes a day off. How an employer handles this absence in terms of employee compensation, however, can pose a trap for the unwary. Even in winter, nothing can be more chilling that facing an FLSA violation.
For non-exempt (hourly) employees, the application of the FLSA is straightforward. First, employers must check whether they are bound by any contractual provisions pertaining to compensation for office closures or absences caused by inclement weather. For example, a collective bargaining agreement (CBA) may provide that all employees scheduled to work will receive their regular rate of pay if inclement weather closes the offices. Or, there may be a policy that requires employees’ pay be docked if they fail to work an eight-hour day. Also, some CBAs may provide for a guaranteed work week for a non-exempt employee, so review your contracts before making any deductions.
If no contractual or policy obligations exist, employers do not have to pay non-exempt employees for any time they are not at work due to weather conditions since, under the law, employers are only required to pay non-exempt employees for time actually worked. This means that if a non-exempt employee comes in late due to weather, or is dismissed early, they need only be paid for the time they are actually working unless a policy or CBA provision dictates otherwise. Employers also may permit employees to take accrued leave instead of a pay deduction. But, if the employer has agreed to pay non-exempt employees for such absences, the FLSA permits these payments to be excluded from the regular rate of pay, which means they do not have to be credited toward overtime compensation because they are not “hours worked.” (Again, check for any contractual provisions to the contrary.)
Exempt (salaried) employees require more careful consideration. When inclement weather causes an employer to shut down its operations for any amount of time less than a full week, the FLSA prohibits salary deductions when the exempt employee is ready, willing and able to work. Additionally, an employer may not make any salary deductions when it decides to delay the start of the work day or to send exempt staff home early due to inclement weather. United States Department of Labor Opinion Letter, FLSA2005-41 (October 24, 2005). However, nothing in the FLSA prohibits employers from deducting paid time off from an exempt employee’s leave bank for partial or full day absences as long as the employee receives his or her full salary. If an exempt employee has not banked any leave, the employee still must receive his or her full salary when there is a shutdown. The FLSA does allow an employer to make full day pay deductions from an exempt employee’s salary if he or she misses a full day of work because of “personal reasons,” which includes transportation issues during inclement weather. See DOL Opinion Letter, supra. Furthermore, government employers may be able to make partial day deductions from an exempt employee’s salary due to absences based on “personal reasons”, or because of illness or injury, if the employer has a “policy or practice established pursuant to principles of public accountability.” See 29 C.F.R. § 541.5d. Government employers should consult with legal counsel regarding the “public accountability” exception under the FLSA.
State of Emergency
Special rules apply when the Governor declares a state of emergency due to weather. Pennsylvania’s Failure to Report to Work During State of Emergency Act of 1998 forbids employers from terminating or disciplining employees for failing to report to work due to road closures in the county of the employee’s residence or place of business. The Act does not require an employer to pay that employee, however. Keep in mind that the FLSA pre-empts any state or local laws regarding employee compensation, so any deductions must be made in compliance with federal law. Furthermore, this Emergency Act does not apply to drivers of emergency vehicles, essential corrections personnel, police, emergency service personnel, hospital and nursing home staffs, pharmacists, essential health care professionals, public utility personnel and others. Municipalities also have the power to declare a state of emergency in accordance with the plan and program of the Pennsylvania Emergency Management Agency, and should refer to their developed response plans for staffing and closures.
All employers should adopt a FLSA “safe harbor” policy. If an employer makes an improper deduction inadvertently or for reasons other than lack of work, the employer can lose the exempt status for all employees in that job classification. However, the possibility of losing the exempt classification can be avoided if the employer adopts and implements a “safe harbor” policy. This policy must be in writing, prohibit improper deductions, and provide employees a way to file complaints regarding deductions. The employer must notify its employees of this policy and promptly reimburse any improper deductions.