Paying Employees during a Shutdown due to Natural Disasters and Inclement Weather

Q: Do I need to pay my employees if my company has closed or temporarily shut down operations due to a natural disaster or inclement weather?

A: It depends.

In the aftermath of Hurricanes Harvey and Irma, and in anticipation of the upcoming winter snow season, many employers are questioning whether they need to pay employees when their company cannot open due to a natural disaster or inclement weather.

Whether an employee needs to be paid will typically turn on whether the employee is exempt or nonexempt under the Fair Labor Standards Act (FLSA). Under federal law, nonexempt employees only are entitled to payment for “hours worked.” Therefore, if a business is forced to shut down for a period of time due to a hurricane, blizzard, or other challenge imposed by Mother Nature, there is no obligation under federal law for an employer to pay nonexempt employees. This makes sense because, quite simply, if a non-exempt employee does not work, there is no requirement to pay them. Employers do have the option of permitting non-exempt employees to use vacation or other paid time off during periods of inclement weather.

Companies generally will be required to pay salaried nonexempt employees in the event of a natural disaster unless the employer’s operations are shut down for more than one workweek. Under the FLSA, salaried exempt employees are entitled to receive their full salary for any workweek in which they perform any work (regardless of the number of days or hours worked). As such, if an employer closes its facilities due to natural disaster for less than a full workweek, an exempt employee must still be paid his or her full salary for the workweek. An employer only is entitled to withhold payment of wages to salaried exempt employees if the employer is closed for an entire workweek and the salaried exempt employee performs no work during that workweek. Should an employer decide to close its facility for more than one workweek, an employer can permit an exempt employee to take vacation/paid time off or allow the employee to work remotely.

Paying employees when a business is closed due to weather concerns is not always legally required but doing so will certainly improve employee morale—especially in instances of a life-altering hurricanes like Harvey and Irma where employees have suffered the loss of a home or personal property. If questions arise regarding payment of employees during natural disasters, consult a labor and employment law attorney.

Lee E. Tankle

Employers Not Required to Submit Pay Data or Follow Higher Salary Basis Threshold for Exempt Employees

Q.  What is the status of the EEOC’s requirement that we submit pay data with our annual EEO-1 Form?  Also, have there been any updates on the lawsuit blocking the DOL’s rule raising the salary basis for certain non-exempt employees?

A.  As we reported previously, the EEOC, as part of its effort to detect and remedy pay discrimination, amended its EEO-1 Form to require that employers with 100 or more employees submit detailed pay data on their workforce.  On August 29, 2017, the OMB sent a memorandum to the EEOC, staying implementation of this requirement.  Thus, at least for now, employers may limit the information provided on the EEO-1 Form to data on race, ethnicity and gender by occupational category (but not data on pay or hours worked).

There is similar relief for employers on the DOL overtime issue.  As we reported in a previous blog post, the United States District Court for the Eastern District of Texas granted a preliminary injunction last November, blocking the implementation of the Department of Labor’s amendments to the overtime provisions of the Fair Labor Standards Act.  On August 31, 2017, the Court took a further step, granting summary judgment blocking the rule.  The Court concluded that the Department of Labor exceeded its authority in enacting a rule raising the minimum salary threshold for executive, administrative and professional exemptions.  This likely is the official end to President Obama’s Final Overtime Rule, although President Trump may revisit the issue of the minimum salary threshold in the future.

For more information on these issues and their impact on employers, please see our Client Alert.

Lee Tankle

EEOC’s Wellness Program Rules in Doubt

Q.  Are the EEOC’s Wellness Program rules still valid?

A.  The ADA and the Genetic Information Nondiscrimination Act both permit an employer to seek medical information as part of a wellness program if the employee participates voluntarily.  However, neither statute defines the term “voluntary.”

Effective January 2017, the EEOC issued rules allowing incentives of up to 30 percent of the cost of  coverage for employees participating in a health-contingent wellness program, in which the participant receives an award for satisfying a health-related factor.  These rules aligned the EEOC’s position with the regulations under the  Health Insurance Portability and Accountability Act (HIPAA), such that employers were able to rely on the 30 percent incentive limit to comply with HIPAA, the ADA and GINA.

In October 2016, AARP filed a lawsuit against the EEOC, arguing that the EEOC’s 30 percent incentive rendered wellness programs involuntary because employees would feel coerced to participate in wellness programs and to disclose medical information to avoid losing the benefit of the incentive.  The court concluded that the EEOC did not offer a reasoned explanation for its decision to construe the term “voluntary” to permit employers to offer incentives of up to 30 percent for participation in wellness programs.

For more information about this important case, please click here.