Employer Responsibilities In Disasters
Many employers wonder what their responsibility is during a disaster. In particular, how does employer liability change in a “disaster” such as Hurricane Harvey versus inclement weather?
The top area for confusion and concern is the payment of wages in the context of a natural disaster. Under federal wage laws, Non-Exempt Employee are paid only for time worked, regardless of whether their absence is due to the employer closing the office/jobsite or the employee’s decision to stay home or evacuate. If the worksite is open and the employee leaves or fails to come in, the employee does not have to be paid for those work hours missed. An exception exists for employees on-call or waiting at the employer’s premises and unable to use their time for their own purposes. In such waiting/on-call situations, the employee must be paid for all time on premises. Exempt employees must be paid their full salary if the employer shuts down work because of adverse weather conditions for less than a full work week, or if the employee only works a partial day as a result of the employer’s decision to close. However, unless there is a company policy to the contrary, the employer can require the employee use his/her accrued paid-time-off (“PTO”) for the absence. If the employee does not have available PTO, the employee is entitled to his/her full salary if the employer decides to close due to weather. Nevertheless, the employee does not have to be paid if the employer is open for business but the employee is absent for personal reasons. In such event, the employee can be required to use their accrued PTO. If the employer has a leave policy but the employee does not have any PTO available, the employee can be placed on unpaid leave, however the employer cannot deduct salaries for a partial-day absence, even though PTO balance deductions are allowed for partial-day absences. As a result, if an exempt employee without a leave balance misses half of a workday, the employer must pay that employee his/her salary for the entire day, with no partial deduction for the absence. Meanwhile, an employee with a leave balance in the same scenario could be required to use half a day of PTO to cover the absence.
Further, disasters may negatively impact payroll processing. Texas law requires that employees be paid twice a month for non-exempt employees and at least once per month for FLSA-exempt employees. The Texas Workforce Commission advises that in the event of a change to the employer’s designated payday as a result of disaster related processing issues, the employer should provide written notice to employees explaining the last old payday, the first new payday, and the next-following new payday. Employers must also provide written notice about any delays to wage payments or changes in the form of wage payments, such as issuing paper checks instead of making direct deposits. Employers might want to assist employees with pay-day advances or consider paying full or partial wages for a set duration, even when not required, to assist employees until government assistance is available, but such payments would be treated as wages for tax purposes for both the employer and employee.
Disasters may present an opportunity for employees to work from home or otherwise work remotely. Non-exempt employees must be paid for all time spent working remotely, even if the employee was not authorized. Exempt employees must also be paid their regular salary when working remotely, even if the exempt employee spends only a few minutes working remotely. The exempt employee can be required to use appropriate PTO for the balance of the time when he/she only works a partial workday.
Not all disasters are disasters. A disaster is not a “qualified disaster” unless the President of the United States declares it as such. Further, only governmental entities can issue a declaration of a “state of emergency.” Employer duties do not change upon the declaration of a state of emergency. In fact, the Texas Labor Code protects employees from discharge or discrimination because of an evacuation pursuant to such a governmental order. The Texas Labor Code creates employer liability for an employee’s lost wages or benefits resulting from a violation. The statute is broadly interpreted to cover voluntary and well as mandatory evacuations, and does not actually define which government officials may issue such orders. Therefore, employers may not know about an evacuation order impacting its employees. In such event, employers should tread lightly and not take adverse action against its employees because of an evacuation work absence without specific information to the contrary that the absence was not disaster related.
Employers may want to assist their employees with disaster relief payments. Qualified disaster relief payments can be made to employees without incurring income or payroll tax consequences under IRS Section 139. However, to qualify as a “disaster relief payment,” the amount or benefit must reimburse or pay reasonable and necessary personal, family, living or funeral expenses arising from a “qualified disaster,” or reimburse or pay reasonable and necessary expenses resulting from the repair or rehabilitation of a personal residence or its contents, to the extent attributable to a qualified disaster. Employer disaster relief payments are applicable only to the extent not covered by insurance or otherwise.
If you have questions or need additional information, contact Cutler-Smith, P.C. for assistance.