Hurricanes Harvey and Irma caused widespread property damage and flooding, and some manufacturers may not be able to reopen their businesses for several months. To assist followers of this blog, I have set out below a few of questions which manufacturers have asked in the last few weeks. I have also set out links to the United States Department of Labor’s FACT SHEETS, which are an excellent source of information. Keep in mind that state laws may require a different answer than those below, which are based on federal law. Before taking action, manufacturers should have a quick conversation with the lawyer of their choice.
Q: “My plant will be closed for two weeks while we clean up. Do I have to pay employees during the time we are closed?”
A: Generally, a manufacturer does not have to pay its hourly workers for hours they do not actually work regardless of the reason the employee does not work. A manufacturer must pay an exempt employee if the employee is “ready, willing and able to work” and the plant is closed. The exempt employee should be paid her or his normal salary. If the exempt employee is unable to work for a full day (i.e., is not ready willing and able to work), then the employer may (but is not required to) consider that time as unpaid “personal time.” If an exempt employee provides services from home, she or he should also be paid the normal salary (unless absent for personal reasons for a full day). See “Fact Sheet #17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA);” “Fact Sheet #72: Employment & Wages Under Federal Law During Natural Disasters & Recovery.”
Q: “I pay employees every Friday for hours worked the previous week. Because of the storm, I cannot get to the plant and we cannot distribute either hard copy or electronic checks. What should I do?”
A: State law, not federal law, governs the timing of wage payments. As a practical matter, one would hope employees and regulators would sympathize with a manufacturer forced to close. Generally, manufacturers should provide notice to their employees and arrange for payments to be made as quickly as possible. The manufacturer may wish to tie this notice to other benefits it may be willing to extend–like allowing employees who are not working to use paid leave instead, advancing paid leave to those who have exhausted leave, and offering cash advances or loans for employees in need. (Check your state’s rules as to how such loans or advances must be repaid as many states prohibit deductions from an employee’s pay even with the employee’s consent.) These actions will not guarantee your state’s agency would ignore a violation, but they can go a long way should an investigation be launched.
Q: “Many of my employees want to pitch in with clean-up efforts. Is this a good idea? Do I have to pay them if they do?”
A: I know how they feel. After Superstorm Sandy, a bunch of dads in my neighborhood who had nothing to do, no power and a bunch of chain saws wanted to go out and start clearing trees. Well-intentioned though they were, others thought this a poor plan. The mix of water, downed trees and limbs, and live power lines suggests most of these activities should be left up to the professionals. However, employees who “volunteer” to help clean-up their own employer’s property could be found to be “working” and entitled to compensation. If a manufacturer allows employees to work to help clean-up a flooded or damaged facility, the manufacturer should take all safety precautions necessary to allow the employee to work safely, consistent with OSHA requirements. The safer course from both a wage and safety standpoint, and one which likely would be appreciated, would be to suggest anyone wishing to volunteer to help in relief efforts offer their services to local hospitals, the Red Cross, or nearby nursing homes and refuge centers.