Don’t let the FLSA’s pay rules snow you under this winter
Winter isn’t a challenging season just because of the lousy weather. It’s tough on Payroll, which must ensure that the company’s pay policies jibe with the Fair Labor Standards Act (FLSA) when employees leave early, arrive late or just stay home because of snow.
Reminder: Not everyone has to deal with winter weather. Needless to say, what applies to blizzards also applies to other inclement-weather events.
Three FLSA rules for nonexempts
The rules pertaining to hourly employees:
• FLSA rule #1: Nonexempts need only be paid for the time worked; that applies to nonexempts who come in late or leave early. It also applies to those who decide to take a day off, and when the business decides to close early, open late or not to open at all. However, nonexempts are usually allowed to substitute accrued time for the time not worked. If nonexempts run out of accrued time, company policy may allow them to borrow time. If they can’t borrow time, they’re out of luck—and out of pay for that day.
• FLSA rule #2 concerns idle-time pay. If nonexempts substitute accrued time, don’t include that time in their regular rates when figuring their overtime rates for that week.
Hitch: Tracking accrued time is burdensome if employees are allowed to substitute small amounts of time. For that reason, many companies allow employees a grace period before substitutions are made; a grace period of up to 30 minutes is common.
• FLSA rule #3: What happens if not enough employees show up for a day, so that opening isn’t worth it? If you send nonexempts home, don’t tell them you might open later, weather permitting.
You may convert the time they spend waiting at home into compensable on-call time.
Three FLSA rules for exempts
What could be more personal than taking a snow day?
• FLSA rule #1: You may dock an exempt who chooses to say home, since he or she is taking a personal or vacation day.
Key: You must dock a full day’s pay. This rule applies regardless of whether exempts have accrued leave or available vacation pay. Of course, you may allow them to substitute accrued time.
Exempts who come in late or leave early must still receive their full pay for the week. But they may be allowed to substitute accrued time off.
• FLSA rule #2: If you allow exempts to borrow time, you may debit the leave banks of exempts who have run out of accrued time, or the leave banks of those who would run out of time due to current debiting. Otherwise, these exempts must be paid their full salaries.
• FLSA rule #3: Business decisions to close early, open late or not to open at all affect exempts differently than nonexempts. The basic FLSA rule is that exempts must be paid their full salaries in any week they perform any work. But every rule has an exception.
Employers with bona fide benefits plans may require exempts to use accrued time off in these situations. However, exempts who run out of time due to current debiting, and those who have already run out of accrued time, must receive their full salary (but see FLSA rule #2 above for borrowed time).