Compensation. Generally, if a business is closed or an employee
does not work, federal and state laws do not require the employee to
be paid; however, there are exceptions. For hourly employees, while
some states and cities do have minimum requirements for minimum
pay if an employee reports for work as scheduled or if work is cancelled
on short notice, if an hourly employee does not work, regardless of
the reason, he or she is not entitled to any pay. In contrast, a salaried
employee is entitled to a normal salary when the business closes
because of weather conditions if the business is open any day of the
week and the employee is “available” to work. That said, similar to
hourly employees, pay is not required for a salaried employee who is
unable to come to work for an entire day, even if that inability is due to
a natural disaster. Remember though, if the salaried employee performs
any work from home, he or she is entitled to be paid for the day.
Even if the law does not require you to pay employees wh ile
your business is closed due to a natural disaster and needed repairs,
there are good reasons why you would do so. I am not talking about
the satisfaction of helping people you know or the positive profile
you might get in the local paper. I am talking about the real business
interest of keeping your team together – the people who make your
business successful and who will not require new-hire training when
you are up and running again. While you could decide to continue
pay through capital reserves or borrowing, a better option may be
having business interruption insurance in addition to the general
insurance that will likely cover only physical damage. While there are,
of course, variations and riders, business interruption insurance can
help you keep your team together while you repair and restart.
Keep in mind that employees cannot “volunteer” to perform
services without being paid the minimum wage or overtime compen-
sation. It is normal for some individuals to feel like the business is
“family” and that “family” pitches in to help out without any expecta-
tion of getting paid. While the sentiment is understandable and
laudable, federal and state law require otherwise: Your employees are
never volunteers for your business and must be paid in accordance
with legal requirements.
Benefits. As with hourly wages and salary, if employees do not
work or the business closes, there is no obligation to continue
health insurance or other benefits. While employers are generally
afforded some leeway in extending coverage to employees who
are not working, make sure that you follow the plan language or
coverage documents.
Leave. Following a natural disaster, you will have to consider how
strictly you will enforce your business’ leave policies. Keep in mind,
though, that legally required leave, such as the Family and Medical
Leave Act (FMLA), disability leave (e.g., ADA), military leave (e.g.,
for National Guard), and the like still apply. Following a natural
disaster, employees or their family members may develop mental
impairments due to stress, which gives rise to a right to leave, or an
employee might not be able to obtain needed medications or to use
certain assistive devices, making them eligible for leave as they are
unable to work due to their disability.
The 2017 hurricane season provided a dramatic reminder of
the need to plan for natural disasters, including planning for the
impact on employees. G
Douglas H. Duerr is a partner at Elarbee Thompson, a national
labor and employment law firm with an industry practice area
focused on franchises. Learn more at www.elarbeethompson.com.
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