So your business was temporarily closed as a result of damage or power disruptions caused by Hurricane Sandy. Are you required to pay your employees for the days they missed? Can you force them to use their vacation time to make up for the lost days?
The Employers Association of New Jersey says it received numerous calls and E-mails from its employer-members following the storm — most of them related to wage and hour and unemployment questions.
The answer to the questions aren’t as straightforward as you would think, and mostly depend upon whether an employee is classified as exempt or non-exempt under the federal Fair Labor Standards Act (FLSA).
Non-exempt employees are covered by the overtime pay requirements of the FLSA. Records are kept of their hours and they are paid time-and-a-half for every hour they work over 40 per week. Exempt employees — usually salaried positions — do not receive overtime pay no matter how many hours they work in a work week.
John Sarno, EANJ president and general counsel, says that many employers are paying employees even they don’t legally have to do so.
“It’s unclear whether employers are paying employees for lost time out of generosity, or out of a misunderstanding of the law,” Sarno says. “With many offices and facilities in New Jersey closed for at least some portion of this past week, many members are struggling with the best approach for compensating employees.”
According to William R. Horwitz of the labor and employment practice group at the Drinker Biddle law firm, companies are generally not required to pay non-exempt employees when they are not working, unless agreements or policies are in effect that state otherwise. “If your business is closed and your employees do not report to work, you are not obligated to pay non-exempt employees,” he says.
Horwitz adds that businesses must make sure that these employees are not checking work E-mails, communicating with supervisors about work-related issues, or otherwise working from home. In those cases non-exempt employees are entitled to be paid for those activities even if they do not physically report to work.
“Some states require an employer to pay employees for reporting to work, even if the business closes and the employer sends them home,” says Horwitz. “For example, a New Jersey employer must pay non-exempt employees who report to work at least one hour of pay.”
Exempt employees, meanwhile, are generally entitled to receive their full salaries, even if the business is closed — unless a business is closed for a week or more, says Horwitz. “If a business is closed for an entire week and an exempt employee performs absolutely no work during that time, the employer is generally not required to pay the employee for the week.”
But if a company decides to close its facility for a full day and the exempt, salaried employee has performed work during the work week, the lost day cannot be deducted from his or her salary, says Sarno. “Likewise, if the employer closes for a partial day, a partial day deduction cannot be made.”
When a business is temporarily closed, the employer can require exempt employees to use accrued vacation time for the time off, but this requirement should be set forth clearly in the company’s employee handbook, and any employment contracts. “The employer should understand that this requirement may create morale problems among affected employees,” Horwitz points out.
As far as requiring employees to report to a business that remains open during a natural disaster, a declaration of a “state of emergency” by officials does not prohibit private employers from telling their employees they must come to work.
“Employers should exercise caution, however, because requiring employee attendance may create liability to employees or third parties if accidents occur as employees try to make their way to work under tough conditions,” Horwitz says.
“Also, while public transportation remains largely suspended and other means of commuting are treacherous, working from home for a day or two may constitute a reasonable accommodation for a disabled employee,” he says.
Employers are also not required to give time off to employees whose homes lives have been impacted by a natural disaster. “Employees whose homes remain without power, who are repairing damage to their property, or whose children’s schools remain closed may seek additional time off from work,” says Horwitz.
“While an employer that can afford to do so may allow additional flexibility to these employees in order to give them peace of mind and improve their loyalty and morale, a state of emergency does not impose any additional obligation on employers with respect to these requests and they may be handled pursuant to the employer’s contracts and policies,” he says.
Sarno says that EANJ has set up a real-time electronic bulletin board to provide information to association members about the decisions other companies are making. According to Sarno, most employers seem to be choosing to pay both hourly and salaried employees for the lost days, although some are requiring the use of banked paid time off.
“It’s a little bit of a mixed bag but I like to think that most employers don’t want to penalize their employees when so many are without electricity, water, and gas,” Sarno says.
#b#Unemployment For Some Sandy Victims#/b#
Unemployment benefits may be available for workers who lost pay due to an office or plant closure, or who lost their jobs as a result of the storm. Residents in 10 New Jersey counties, including Somerset and Middlesex, are currently eligible for federal Disaster Unemployment Assistance (DUA) as a result of the hurricane.
Mercer County is awaiting a decision on eligibility for assistance for homeowners and business owners who suffered damage from the storm.
DUA is available for persons, including self-employed individuals, who were living or working in the affected counties at the time of the disaster, and who are unemployed as a direct result of the damages caused by the storm, according to Lorette Pruden of the small business consulting and coaching firm Team Nimbus N.J., located in Belle Mead.
“Most impacted workers may already qualify for regular unemployment insurance,” says Pruden. “The federal DUA is a special program that covers many people who otherwise may not be eligible for regular unemployment insurance.”
A 30-day deadline — ending December 3 — is in effect for filing DUA claims resulting from Sandy. Other eligible counties are Atlantic, Bergen, Cape May, Essex, Hudson, Monmouth, Ocean, and Union.
DUA is currently available only in the 10 counties that have been declared a federal a disaster area and available for individual assistance. Additional counties may be added to the disaster declaration as a result of ongoing damage assessments by local, state, and federal officials.
Pruden says that anyone unemployed in those counties as a result of the disaster starting on October 28, should first file for unemployment insurance benefits on the Internet at www.njuifile.net.
Although the Internet processes claims faster, people can also file a claim by telephone by contacting the state Department of Labor’s Re-employment call center at 732-761-2020.
Once eligibility for state unemployment insurance is determined — the self-employed will be denied benefits — federal DUA can be applied for.
For additional information about DUA, are or for FEMA services, call the FEMA emergency number at 1-800-621-FEMA (3362), or go to www.disasterassistance.gov or www.fema.gov.
“I’m sure there will hoops to jump through, so start early if your income has been affected by Sandy,” says Pruden.