Bad Weather Closures: Employer Payroll Obligations 

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Guidelines for paying staff when bad weather closes a workplace or halts business operations 

Employers’ pay obligations during inclement weather closures are based on the worker’s Fair Labor Standards Act (FLSA) classification—depending on whether the employee is classified as an exempt employee or a non-exempt worker who is eligible for overtime. Additionally, some state laws may come into play depending on the circumstances involved.  

Whether or not you maintain a brick-and-mortar workplace or have remote workers, it is advisable to have a pay policy in place that covers your payroll obligations if you must shut-down operations at the worksite. This policy needs to include remote workers who can no longer access the company worksite systems or lose power at their remote work location and are unable to perform their work duties.   

 

Non-exempt Employees [Hourly Wage Employees] 

  • Under the FLSA, employers are only required to pay hourly, non-exempt employees for hours worked. If there is no employment contract, collective bargaining agreement, or state law saying otherwise…non-exempt employees generally do not need to be paid for anything beyond their worked hours 
  • The employer must pay non-exempt employees for any time spent working at a facility before closure or standing by awaiting further information on the closure.  
  • There is an exception for non-exempt employees who are paid fixed salaries under the fluctuating workweek. The employer must pay these employees their full weekly salary for any week in which any work was performed. 
  • Some states do have “report-in” or “call-in” pay laws that require employers to pay non-exempt employees if they show up to work as scheduled but are sent home or sent home earlier than scheduled. Employers should check their state laws for such requirements. Otherwise, employers are not required to pay hourly, non-exempt employees for business closures or early closures.  
  • If a non-exempt employee works at home, the employer must pay for all the time worked. Procedures should be in place for employees to record their time so that they are correctly paid. If the Internet is required for a timekeeping system, employers should remind non-exempt employees in advance to write down their hours worked in such situations. 
  • Some states with paid sick leave requirements now cover “safe leave,” which includes leave coverage for extreme weather.  
  • Employers should also be aware of state and local predictive scheduling and call-in laws that could require non-exempt employees to be paid for missed time due to inclement-weather business closures.  

 

Exempt Employees [Salaried Employees] 

  • Exempt employees must be paid when they work any portion of a workweek, including situations of inclement weather and natural disasters.  
  • The DOL provides a list of the instances in which an employer is permitted to dock exempt employee pay, and business closures are not one of the permitted deductions.  
  • If an employer sends exempt employees home early because of inclement weather or pending natural disasters, an employer is obligated to pay exempt workers for the entire day.  
  • If an employer decides to close for an entire day because of inclement weather, an employer is still required to pay exempt employees for the entire day.  
  • When an employer closes for less than a full workweek because of a storm, the FLSA requires the organization to pay an exempt employee for the days it is closed.  
  • The only instance in which an employer is permitted not to pay exempt employees because of inclement weather or a pending natural disaster is when a business closes for an entire week, and exempt employees perform no work during that week.  
  • There is also no obligation to pay an exempt employee when the business remains open during inclement weather and an exempt employee chooses to take the entire day off for personal reasons. 
  • An employer can generally require that an exempt employee use paid time off (PTO) when the employer is closed.   
  • When an exempt employee arrives late or leaves early, they must be paid for the full day, but the employer can require them to use PTO, if available, to cover the non-working time.   
  • If an exempt employee does not have sufficient accrued leave benefits, the employer must pay the employee’s full salary for absences caused by weather-related closures.  
  • The employer must also pay exempt workers for the full day if they do any work from home.  
  • For remote workers, employers should be careful about taking deductions from employees’ salaries for inclement weather. Even if the workplace is closed, there is a high probability that exempt employees are working at home despite weather challenges. 

 

 

Using Sick Time or “Paid Time Off [PTO]”  Accruals During Closures 

  • Using Sick time: Although Oregon sick time does not generally cover weather-related closures, however, when the impact of inclement weather results in a public health emergency declaration, employees may use sick leave for business closures and to care for a child whose school or place of care has been closed by a public official. 
  • Employers may require both non-exempt and exempt employees to use paid time off (PTO) in times of inclement weather or natural disasters. If you require your workers to use up their allotted PTO time due to forces beyond their control, this could impact employee relations and become a morale issue. An exception might be if the state mandates paid sick leave, which is only to be used for specific circumstances.  
  • Mandatory use of PTO can be applied to full-day or partial-day absences. As for exempt employees, FLSA allows the substitution of PTO for regular wages as long as the exempt employees receive their fixed weekly salary. See DOL Opinion Letter FLSA2005-41. 
  • If a non-exempt employee has exhausted their PTO, absences or early departures due to the employer’s business closures are generally not compensable, with the exception of any state report-in pay laws as described earlier. 
  • If an exempt employee has exhausted their PTO, an employer must still provide exempt employees guaranteed salaries for closures of less than a full workweek in these situations.  
  • When requiring employees to use their PTO for business closures, employers should have a written policy in place to inform employees of this requirement. Policies should be applied fairly and consistently to avoid any potential discriminatory claims from employees.  
  • Employers will also want to ensure that their policy on mandatory use of PTO complies with their state laws.    

 

Policy Considerations 

When employers craft and implement inclement weather policies, companies should consider the following: 

  • The definition of “inclement weather” should be based on your local geography and workplace location, including past history of local weather challenges, power outages or commuting issues. 
  • Potential safety issues of employees during adverse weather or natural disasters. 
  • Scenarios or situations of when the business will close, open late, or stay open in adverse weather. 
  • Which employees are able to work remotely in a weather scenario (and which are not suited to do so).  
  • Employers should ensure that employees who can telecommute have the necessary equipment to work remotely if the weather dictates a quick pivot.  
  • While there is no mandated requirement to pay non-exempt employees, consider the impact on employee relations when you pay exempt workers but do not pay non-exempt employees for a day on which you are closed.