By Linda H. Evans,
Senior Associate.
This winter many areas of the country have had more than the usual number of winter storms resulting in closed schools and businesses. How do closures impact wages for exempt employees who typically get a set amount on each paycheck, regardless of the number of hours worked? Here are the basics about business closures and exempt employees’ deductions:
Subject to limited exceptions, an exempt employee must receive his/her full salary for any week in which the employee performs any work without regard to the number of days or hours worked. Exempt employees need not be paid for any work week in which they do not work any hours.
“An employee is not paid on a salary basis if deductions from the employee’s predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. If an employee is ready, willing and able to work, deductions may not be made for time when the work is not available.” 29 CFR section 541.602(a). This would include businesses closed due to weather emergencies.
However, if the business stays open during bad weather, it may deduct one full day’s pay from the salary of an exempt employee who does not report to work for any part of the day due to adverse weather conditions. The DOL views this as an absence for personal reasons, which is one of the limited exceptions allowing deductions from exempt employee’s salary. To add to the confusion, if that same employee is out for 1 ½ days due to bad weather, but the business is open, the employer can only deduct for the one full day of absence and the employee gets a full day’s pay for the half day that was worked.
Another twist: DOL views vacation or PTO time as not required by law. So if the employer closes business due to bad weather for less than a full work week and the exempt employee does not come to work, the employer can deduct vacation days, provided the employee still receives a full salary. If an employee has no PTO days left, the employer still must pay the full salary. If the employer is going to deduct vacation/PTO days in such situations, it is best to have that stated in the employee handbook.
These issues do not pertain to hourly employees. The law only requires them to be paid for hours worked.
