With extreme winter weather already forcing many Michigan employers to temporarily close their doors, a persistent issue is the question of whether (and to what extent) an employee must be paid during a weather-related work closure.
The answer to this question depends largely on whether the employee is classified as “exempt” or “nonexempt” under the federal Fair Labor Standards Act (“FLSA”). Generally speaking, FLSA nonexempt employees – typically referred to as “hourly” employees – must be paid only for actual hours worked. Thus, if a business closes and sends employees home, or cancels work altogether, the employer must pay its nonexempt employees only for the time spent working. (Be aware, however, that some states have enacted “report-in pay” laws which require certain compensation for nonexempt employees who report to work, only to be sent home.)
In contrast, as it relates to exempt employees – those who hold bona fide executive, administrative, professional and outside sales positions – federal regulations provide that “[i]f the employee is ready, willing and able to work, deductions may not be made for time when work is not available.” Nonetheless, where a business closes for an entire week, and where exempt employees perform no work during that week, the employer may generally withhold pay for that week. Further, employers are generally permitted to require exempt employees to use paid time off to cover days missed due to weather-related work closures, provided that employees who do not have enough paid time off to cover the closure are not docked in pay. (Businesses should clearly set forth their paid leave policies in the employee handbook.)
Of course, the question of whether an employee is exempt or nonexempt can be a tricky one, and clients are cautioned to exercise care in determining the status of an employee.
Being aware of the legal implications of work stoppages can help keep your business from getting caught in an avalanche of litigation.
As always, please contact Wright Beamer if you have any questions about this or any other legal issue.