How to Pay Employees After a Natural Disaster

Q: What is the standard for how to pay employees after a natural disaster?

A: When the company closes due to inclement weather, non-exempt employees (those who are entitled to overtime) need to be paid only for actual hours worked. For non-exempt employees, the company may:

1. Pay the employee for the time, even though they did not work;
2. Require they take the day off unpaid;
3. Require they use any available vacation time or PTO; or
4. Allow employees to choose between taking an unpaid day or using vacation or PTO.

All four options have their merits. We generally recommend option 4, allowing employees the choice of using vacation time or PTO. When the company closes due to inclement weather, exempt employees (those ineligible for overtime and generally paid on a salary basis) must be paid their regular salary.

This holds true whether the office closure is for full or partial days. You may, however, require exempt employees to use accrued vacation or PTO during a closure if you have a policy that indicates you will do so or if doing so has been your practice in the past. If your office has closed for weather in the past and you have not required exempt employees to use vacation or PTO, it would be risky to take up that practice now. When it comes to accrued vacation or PTO, it is safest to give employees advanced notice if there are situations where you will use their accrued hours whether they like it or not. If this is the first time the office has been closed due to weather and you have no policy in place, now is the time to decide how you want to handle these kinds of situations in the future.

For exempt employees who do not have sufficient vacation or PTO to cover the closure, you are still required to provide them with their full regular salary. For example, if your business is closed for two or three days, but an exempt salaried employee worked at another time during the workweek, the full salary must be paid. The only scenario where you will not be required to pay an exempt employee their full salary is if the office is closed for an entire workweek (or if the employee is unable to come in for an entire workweek) and they do no work at all from home.

Worried about your payroll during or after a natural disaster? GTM Payroll Services makes sure that in case of a disaster, you don’t need to worry. Learn more, then contact us for more information.