Inclement Weather Poses FLSA Challenges

Inclement Weather Poses FLSA Challenges

When work closes because of inclement weather, exempt and nonexempt employees are treated differently under the Fair Labor Standards Act (FLSA). This is a concept most employees and employers struggle to understand.

It is suggested to review and follow the existing inclement weather policy, should the company have one.

But… What is the actual law?

If the company closes for weather-related reasons, nonexempt employees are not entitled to pay. The employer can allow nonexempt employees to use accrued paid time off, vacation, or sick (PTO) to cover their absences. If PTO is not available, the time off is unpaid. Some employers have mandatory use of PTO policies which is acceptable.

Some employers provide a fixed number of paid inclement weather days per year.

As for exempt employees, the application of weather-related absences is more complicated. In the case where an employer is open for business but an exempt employee chooses to stay home, that employer is not entitled to pay the employee for that day because he/she chose to remove themselves from the workplace for personal reasons. If the employer has a PTO policy and the employee has accrued time, the employer can use the PTO to cover their absence. In the event there is no accrued PTO available, the employer can reduce the employee’s pay for the absence, in full-day increments, without violating the salary-basis test of the FLSA.

However, if the employer decides to close for weather-related reasons, the employee’s full salary must be paid for the week even though he/she may not have worked the full workweek.  In this scenario, the employee is available for work, but it is the employer who has made the work unavailable to the employee.

Bottom line… Employers should not reduce the weekly compensation from exempt employees for partial days caused by bad weather.

For a relevant DOL opinion letter, check out the link below.

FLSA Lawsuits Are On The Rise

FLSA Lawsuits Are On The Rise

Federal Fair Labor Standards Act (FLSA) lawsuits numbered over 7,000 in 2012 alone.  Companies such as Walmart, Staples, Merrill Lynch, JPMorgan Chase, Oracle, CVS, Tyson Foods, Lowe’s and AT&T have been subject to significant FLSA penalties.

FLSA lawsuits don’t target specific types of companies; every company could be faced with this challenge and the ensuing penalties.

Determining violations

In order to determine violations, investigators generally look at the following five areas.

Earnings codes

Your company’s earnings codes may be the easiest way to identify compensation being improperly excluded from the regular rate. In an FLSA lawsuit investigation, investigators tend to first look at safety, incentive, bonus, auto allowance, operator incentive and per diem.

Deduction codes

Looking at your list of deductions codes can also reveal existing issues such as appropriate deductions or if the deductions reduce wages below minimum wage.  Investigators will pay special attention to advances, laundry, safety glasses, tools, uniform fees and shoes and union dues.

It’s important to remember to document anything that requires employee authorization and to avoid deductions that cause pay to go below minimum wage.

Your time system

Your time and attendance rules and the resulting employee time punches can be one wage and hour issue, but there are several causes:

  • Rounding rules – make sure rounding is fair
  • Automatic meal period deductions – single largest reason for litigation; if you require employees to punch out/in rather than auto deduct, you have proof of meal periods
  • Time clock rules treat clocking in early or late the same for everyone
  • Shift hours overlaps work weeks; this may cause underpay one week and overpay the next week

Time card dangers

There are a few areas which investigators focus on as possible clues to inappropriate time clock management.

  • Identical in/out and meal period times for almost every day – is the employee actually punching?
  • No out/in and meal time punches – hard to prove if nothing is documented
  • Exact time punches when shift begins
  • Employee time punches are almost the same exact time – possibly buddy punching

Pay stub issues

  • Paid for fewer hours than shown on time record
  • Deductions for work required equipment (e.g., uniforms, tools)
  • Employee was paid a shift differential or bonus instead of overtime pay

Avoiding difficult, expensive and time-consuming business problems are now a part of our reality with FLSA lawsuits.  Proper record keeping and documentation is vital, along with a time and attendance system that integrates with payroll and other business functions.

Your systems should have consistent rules across the board, maintain documentation, have easy data management and reports to prove your compliance.