HR compliance concerns for employers affected by a disaster

The impact of Hurricanes Harvey and Irma is devastating, with some experts estimating that the storms caused between $150 billion and $200 billion in damage to Texas and Florida.

And while recovery and rebuilding efforts are underway, businesses with operations and/or employees in areas affected by Hurricanes Harvey and Irma face a host of practical, legal and other HR compliance concerns.

Delayed wage payments

One very real, pressing concern for employers affected by these storms was how they were going to pay employees, especially if they are unable to get to the office due to flooding or other structural damage.

Employers that are unable to process or fund payments in accordance with applicable state/local laws as a result of the storm should inform employees in writing and as soon as possible that the organization is experiencing problems processing wage payments, as well as when they can expect to receive payment. especially in the immediate wake of the storm. Employers that will experience delays in processing payroll for employees located in states other than those directly affected by Hurricane Harvey or Hurricane Irma should also be mindful of the laws governing wage payments in those states.

A great way to make sure your business' ability to pay your employees isn't disrupted during a hurricane or other disaster is to outsource your HR and payroll processing to a professional employer organization like G&A Partners.

Paying employees who were unable to work due to the storm

Employee classification (i.e. exempt vs. non-exempt) under the Fair Labor Standards Act (FLSA) is critical to determining which employees must be paid when a business' operations close due to weather.

Non-exempt employees

According to the FLSA, non-exempt employees must only be paid for the time they work. In regards to Hurricane Harvey, this means that employers do not need to compensate non-exempt workers who are not working because of the storm. According to an article from labor law firm Littler, "it does not matter whether the absence is based on the employer's decision to close a worksite or the employee's decision to stay home (or evacuate)."

There may, however, be exceptions to this general rule for non-exempt employees who are on-call, as well as those on "waiting time" during a weather event. According to the U.S Department of Labor's (DOL) Wage and Hour Division (WHD), "[a]n employee who is required to remain on call on the employer's premises is working while 'on call.' An employee who is required to remain on call at home, or who is allowed to leave a message where he/she can be reached, is not working (in most cases) while on call. Additional constraints on the employee's freedom could require this time to be compensated. " Waiting time is a bit less rigidly defined, although the WHD does distinguish that compensable waiting time is time during which an employee is "engaged to wait", not time an employee spends "waiting to be engaged."

Exempt employees

The rules for exempt employees are quite different. According to the WHD, "an exempt employee must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked," with a few exceptions for permissible deductions.

Littler's article on the subject goes on to say that, "barring any state law or overly restrictive company policy to the contrary, exempt employees may be required to use accrued leave or vacation time (in full or partial days) for their absences." It is quick to point out, however, that this is not likely to be a popular decision, as well as that if an exempt employee doesn't earn or have any available leave time he or she is still entitled to their full guaranteed salary even if the employer decides to close the worksite due to weather.

Exempt employees who choose to stay home due to a weather situation when the employer's operations are open, however, can be considered absent for personal reasons and the employer may require the employee to use accrued leave time to cover the absence under a bona fide leave policy. The Littler article also points out that "[i]f an employer has a leave policy, but the absent [exempt] employee does not have a leave account balance, the employer is not obligated to pay the employee," and can place the employee on unpaid leave for any and all of the full days he or she failed to report to work. (Salary deductions are not allowed for partial-day absences.)

Remote work

Depending on an employer's specific business operations, as well as the job functions of each of its employees, having employees affected by Hurricane Harvey (or other weather events) work from home may be a good short-term and possible long-term solution.

Particularly with respect to non-exempt employees, finding ways to effectively track time worked becomes paramount when employees are working remotely as a result of a weather event. (Employers must pay a non-exempt employee for any time spent working remotely, regardless of whether or not he or she had express permission to work from home.) Employers that already have an electronic/web-based time and attendance system in place can certainly still utilize those systems as long as their employees have access to those systems. Employers without web-based time tracking systems, may instead need to have employees manually track time spent working remotely.

Leave

Employees may be entitled to use accrued leave, either under an employer's own leave policy (sick, vacation, PTO, etc.) or a collective bargaining agreement, or be protected by the Family and Medical Leave Act (FMLA to the extent they otherwise meet FMLA eligibility requirements. FMLA regulations state that any period in which business activities have been suspended and employees are not otherwise expected to report for duty cannot be counted against the employee's 12-week FMLA entitlement. Employers should make sure they understand how their own HR policies and any applicable laws may relate to this disaster, and then communicate that information to managers and supervisors so they are equipped to handle questions from employees.

Unemployment compensation

When a major disaster has been declared by the President, Disaster Unemployment Assistance (DUA) is generally available to any unemployed worker or self-employed individual who lived, worked, or was scheduled to work in the disaster area at the time of the disaster and whose employment has been lost or interrupted as a direct result of a major disaster. DUA is only available during a disaster assistance period, which begins with the first Sunday following the date the major disaster is declared.

Employers that cannot provide work for employees as a result of Hurricane Harvey or Hurricane Irma, or with workers who cannot reach their place of employment or who may otherwise qualify for DUA as a result of these storms, may consider making employees aware of these programs.

Each state operates its own unemployment insurance program. Click here to find available contact information specific to your state on how to file for disaster unemployment assistance benefits.

Layoffs

It's an unfortunate reality that some employers whose operations were greatly impacted by these storms may decide to close a facility or implement a mass layoff. Employers that find themselves in one of these situations will need to assess whether notice of these actions will be required under the Worker Adjustment and Retraining Notification Act (WARN).

WARN is a federal law that protects workers and their families by requiring employers with 100 or more employees to provide notification 60 days in advance of a mass layoff or a plant closing. While the Act does allow some latitude with regard to the 60-day notice requirement in the event of a natural disaster, it's not much. Employers must be able to demonstrate that the reason for the layoff was directly caused by the disaster, and the Act states that employers are still required to provide "as much notice as is practicable."

If an employer decides to downsize its operations or workforce as a result of a disaster like Hurricane Harvey, it should make sure to document the business justifications for doing so, as well as evidence that alternatives were considered. Should any litigation result from workforce reductions, this documentation will help demonstrate that business reasons were the only consideration in layoff decisions.

Other disaster-related HR compliance concerns

USERRA

The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) offers protections extended to certain federal emergency workers dispatched to assist with national disasters, including those employees performing as intermittent disaster response appointees upon activation of the National Disaster Medical System (NDMS), even if they are not otherwise members of the uniformed services.

Hardship distributions

The Internal Revenue Service (IRS) is providing faster & more liberalized access to hardship distributions from certain qualified retirement plans for individuals working or residing in counties affected by these disasters (as identified by FEMA) have been made available through January 31, 2018. The IRS has is also allowing employers to expand the types of financial events that are eligible for a hardship distribution, as well as waive provisions in the plan prohibiting employees from making contributions for at least six months after the hardship distribution.

Direct disaster assistance

The IRS guidance about disaster relief, allows employers to make tax-free direct assistance payments to employees in the event of a "qualified disaster" (i.e. designated by FEMA), or to set up non-exempt funds to collect donations from other employees to distribute to employees affected by a qualified disaster, without having to create a private foundation, public charity or donor-advised fund. Such qualified disaster payments are not considered taxable income or subject to employment taxes or federal income tax withholding.

A leading provider of outsourced HR, benefits and payroll solutions,G&A Partners is committed to taking the guesswork out of HR compliance and providing our clients with the service, support, resources and information they need to stay compliant with all applicable labor and employment laws.

This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact their legal counsel for legal advice, and their CPA or other tax professional for tax advice.