Consultant’s Corner: Do I Have to Pay Employees When Bad Weather Closes the Business?

Q. Are employers required to pay employees for days they could not come to work due to inclement weather and the building was closed?

While you may want to consult your local labor lawyer to confirm your employee compensation requirements for particular business closure situations, as a general rule, exempt employees will need to be paid their regular salaries for absences during weather-related business closures. In contrast, non-exempt employees generally do not have to be paid for absences during weather-related business closures.

However, with both exempt and non-exempt employees you may allow or require them to use vacation or other personal time off (PTO) to cover their absence during weather-related business closures, assuming you have an HR policy in place to that affect at the time, but doing so isn’t a legal requirement.

Rules for Exempt Employees

Under the Fair Labor Standards Act (FLSA), employers cannot reduce payment for exempt employees if there is no work available and they are ready, willing, and able to work. Extending that concept, the Department of Labor’s rule is that if you decide to close your business due to inclement weather for less than a full week, exempt employees must still receive their regular salary.

It’s a different situation if your business is open but an exempt employee doesn’t come in due to the bad weather. In that case, the employee is not considered ready, willing, and able, regardless of the reason for the absence. So the general rule for this scenario is that exempt employees can be docked pay if they miss a full day, but not for partial-day absences (the Department of Labor requires a full day’s pay for partial-day absences, whether late arrival or early departure, when it’s weather-related). However, some employees will pay employees during inclement weather scenarios anyway, or use vacation days or paid time off.

Non-Exempt Employees

The rules are different for non-exempt, hourly employees. In that case, it’s up to you as the business owner to decide whether to pay for days when you are closed due to inclement weather. The FLSA makes no requirements on what you do. Just establish a consistent policy for how you will treat employees when the weather causes you to close the business or prevents non-exempt employees from making it in to work.

Department of Labor Resources

http://www.dol.gov/whd/opinion/FLSA/2005/2005_10_24_41_FLSA.htm

http://www.dol.gov/whd/regs/compliance/whdfs72English.htm

http://webapps.dol.gov/elaws/whd/flsa/overtime/cr4.htm

 

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Bill Wortman

About Bill Wortman

Bill Wortman is the Chief Business Consultant for GoSmallBiz.com, with over 40 years of business experience. In addition to 12 years consulting small business owners, Bill’s professional career includes a big-eight CPA accounting firm, national consumer finance, big-three automotive manufacturing, Arby’s fast food, marketing, and other industries. He’s held multiple executive-level positions and fulfilled the role of CFO at large, publicly held (NYSE, NASDAQ, and AMEX) corporations. In addition, he’s been an owner of private ventures involving residential real estate development and a General Motors new car dealership.