How Does Payroll Work in Times of Natural Disaster?
As a result of Hurricane Harvey and the subsequent flooding throughout Southeast Texas, many businesses that were forced to closed may be wondering how to handle payroll and PTO issues. Here are a few tips and guidelines to help clear up the confusion:
- Exempt (or salaried) employees: the employer is required by law to pay full salaries for any week in which the employee worked at least a portion of the workweek. Therefore, you cannot dock exempt employees’ pay for days not worked due to hurricane and flooding related office closures.
*Note: The U.S. Department of Labor considers an absence caused by transportation difficulties experienced during weather emergencies, if the employer is open for business, as an absence for personal reasons. In this case, an employer may place an exempt employee on leave without pay (or require the employee to use PTO) for the full day that he or she fails to report to work. If an employee is absent for one or more full days for personal reasons, the employee's salaried status will not be affected if deductions are made from a salary for such absences. However, a deduction from salary for less than a full-day's absence is not permitted, although the employer may make a partial day time deduction from the employee's leave bank (if there is insufficient time in the leave bank, no deduction from salary can be made).
- Non-exempt (or hourly) employees: the employer is required by law to only pay hourly employees for time worked, so their pay can be affected by the hurricane.
- Because caution is recommended when docking pay, employers may choose to consider requiring exempt employees to "make up" lost time after they return to work instead. However, this is not allowed for non-exempt employees, who must be paid overtime if they work more than 40 hours in a workweek.
For more information, please feel free to contact Achilles Group here.
- Employers can also require both exempt and non-exempt employees to use PTO during inclement weather events or natural disasters. Some employers may pay their employees for 2 or 3 days, and then require PTO for the rest of the missed days.
- You can also set up a one-time “PTO bank” to help your employees. This would give those employees with more accrued PTO the option to donate it to other employees who may have been more heavily affected by the storm.