Whether it’s a major event such as Hurricane Sandy or simply a snow day, businesses need to be aware of the wage and hour implications of weather-related absences.
“It is important to have clearly defined policies in place that address the many pay-related issues that are involved with a weather-related closing,” says Jenny Swinerton, general counsel at Sequent. “In addition, it’s always a good idea to implement a contingency plan that identifies essential personnel who are vital to the continued operations of the company and establish procedures for communicating with employees regarding emergency closures.”
The same issues apply in cases when businesses close because of an outbreak of the flu.
“This is expected to be one of the worst flu seasons we’ve had in years, so it’s a good time for businesses to review their existing policies to ensure that they address all of the various issues that arise when an employer is forced to close for any reason.”
Smart Business spoke with Swinerton about weather-related absences and how the Fair Labor Standards Act (FLSA) dictates pay requirements.
What happens to employees’ pay when a business closes because of weather?
Employees are treated differently under the FLSA depending on whether they are classified as nonexempt or exempt. Briefly, nonexempt employees are those who are entitled to overtime pay. Exempt employees are those who are paid on a salaried basis and also meet specific legal requirements to be exempt from the overtime pay requirements.
The FLSA requires employers to pay their nonexempt or hourly employees only for those hours that the employees have actually worked. As a result, if a nonexempt employeed are unable to come to work or the office is closed, the employer is not required to pay them.
Exempt employees generally must be paid their full salary for any week in which they perform work. So, if an employer closes the office because of inclement weather or other disasters for less than a full workweek, the employer must pay the exempt employee’s full salary for the week. The employer may, however, require the exempt employee to use vacation or paid time off.
Does the length of a shutdown determine how you handle absences?
It really doesn’t matter for nonexempt employees because they’re paid only for hours worked. So if you shut down for a week, you don’t have to pay nonexempt employees during that time. With salaried employees, unless an employer suspends operations for an entire workweek, they must be paid their regular weekly salary regardless of the number of hours they worked. This becomes tricky with telecommuting because an exempt employee is often going to be checking email or responding to phone calls even while stranded at home during a storm. If exempt employees work for a small portion of the workweek, they must be paid for the entire week.
If you make deductions from exempt employees’ compensation for absences attributed to inclement weather, you may jeopardize the employees’ exempt status and incur liability for any overtime they may have worked.
What happens if an employer’s business is open, but exempt employees don’t show up?
If the employer remains opens during or after a natural disaster and an exempt employee cannot report to work, the Department of Labor considers this to be an absence for personal reasons. But deductions may only be made from the exempt employee’s salary in full day increments. However, it is important to remember that if a salaried employee performs even a little bit of work during the day, employers are still required to pay the employee’s full day salary.
What else should be considered?
Employees who are instructed to remain on call during inclement weather and who cannot use the time for their own personal benefit must be compensated for this time. Additionally, if employees are performing job duties outside their normal scope, such as sweeping the floor, they may be considered a volunteer and do not need to be paid for that time.
Read Sequent’s blog — frequent posts from a wide range of Sequent experts regarding HR, technology and consulting.
Jenny Swinerton is general counsel at Sequent. Reach her at (614) 410-2362 or email@example.com.
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Warren Barhorst was getting into trouble at his previous job. His performance reviews weren’t commendable when it came to his interaction with other employees. But as a technical salesperson with a degree in industrial distribution, he was able to stick it out for six years, hoping for a reasonable outcome.
“I would get a performance review, and it would say, ‘Warren is intolerant of other people’s inability to get the job done,’” he says. “That made me realize I probably wasn’t going to be successful in the corporate world. If I wanted to get where I wanted to go, as a human being, I was probably going to have to build something myself.”
Barhorst turned in his notice and had an exit interview of sorts with his supervisor.
“I went to my boss who was a great mentor of mine,” he says. “I left on very good terms. I said, ‘I’m going to quit this gig and start an insurance agency.’ And the boss started laughing and said, ‘You know, Warren, there is an insurance agency on every corner.’ I laughed, and I said, “You’re right. The problem is that none of them are any good.’
At that point, Barhorst made a commitment to himself that his belief and passion would help make him an entrepreneur — and a successful leader.
“You only have to be just a little bit better than your competition, and you can start taking market share,” he says. “That was my belief then when I analyzed it and is still my belief today. My No. 1 requirement for being a leader is that you’ve got to have passion; you’ve got to have belief.”
Barhorst was more than committed; he knew that passion and belief to create a better customer experience was a winning combination.
“You can call insurance companies and they won’t answer the phone, they won’t return your phone call, they won’t give you a proposal or a quote on your insurance,” he says. “It goes on in lots of other businesses. You walk into a car dealership; sometimes it’s hard to buy a car. Nobody seems to want to serve you; no one seems to want to sell you anything.
“I think that attitude is what got me into the business. It could have been any other industry. The insurance industry just happened to present itself.”
Here’s how Barhorst inspires passion and belief in the employees of the company, which was recently rechristened Iscential.
Start with managers
While some leaders and managers may have no problem using their passion and belief to encourage employees to go the second mile, others may have difficulties. The source of the shortcomings may often lie with the manager and not the employee.
“I see it a lot of it in those who lead departments or segments of a business,” Barhorst says.
“Usually if they are struggling with something, if you go back and look at it, their fundamental challenge is their lack of passion and belief for what they’re doing. If people can’t feel passion or belief on you, or see that on you, or smell that on you, for lack of better ways to describe it, you probably can’t lead people. They won’t follow you.”
The fundamental solution is for a leader to teach employees all the tasks necessary to continue to grow the company. By doing so, a leader does not only rally employees to strive for company growth, but it also solidifies the leader’s position as one who can communicate his passion and belief.
“I think our company is no different than any other I have studied,” Barhorst says. “You start it and you run it on the power of yourself and a couple of other people, and then you realize pretty quickly that if you really want to take it somewhere, you’ve got to leverage yourself and other people. You’ve got to teach other people how to do things so that you can continue to grow the company.”
That’s the role of influence: take employees’ passion to improve and encourage their attitude to become contagious to the rest of the organization.
“What has to happen to an owner or a manager, it doesn’t matter which, once you realize that for you to be successful you have to leverage yourself to other people,” he says.
A frame of mind that includes a picture of the organization showing its outdated conceptions must be updated.
“You have to change your mindset about employees,” Barhorst says. “I know this buzzword has been around for 50 or 100 years — that we should treat employees as assets. It’s kind of a paradox because if you look at a balance sheet, or a P&L or any financial documentation for a business, the employees are always on the liability side of the ledger and a chair that you buy that gets tattered and worn out is considered an asset.”
This is a matter of retraining your thoughts that employees actually appreciate in value over time.
“An asset doesn’t depreciate in value,” Barhorst says. “A chair that you buy, the day you get it, it’s getting older and uglier; whereas an employee that you hire, if you mentor, teach, coach and train them, they actually become increasingly valuable to your company.”
Recognizing opportunities for existing employees and delegating responsibilities appropriately can go a long way toward pleasing employees who want to grow personally and professionally.
“People talk about the buzzword of employees as assets, but it starts with that fundamental mind shift. What we are talking about here is, ‘Do I understand that they are an asset to our company and that through them I can actually grow this business?’
“I think the managers and leaders that get that — those are the ones that really rock and roll. The ones that don’t, you can tell by a couple of questions about their employees and just their mindset that they’re probably not very good leaders because they look at the employees as a liability or a pain in the rear.”
Change your mindset
If you are going to value an employee as an asset rather than a liability, you need to put employees in positions to utilize their strengths, which may mean changing the company culture. Managers and leaders who value employees that way will find the team just bursts at the seams and goes forward.
One of the modifications that Barhorst made to show his commitment to employees was to change the name of his company.
“When you name it after the founder, no matter what you do, no matter how you try to build the culture, no matter how you try to make things work, it always ends up being about the founder,” he says.
His team made up the name Iscential, a play on the word “essential.”
“We didn’t want to be about Warren Barhorst the founder,” Barhorst says. “It’s really about you, you as a customer, you as an employee and you as a vendor or partner of ours. That reflection or realization for me was a big change in the way our company acts and in the way it looks. That realization made me understand how important the culture element is in a company.”
One culture that often forms on its own and should be avoided is the interruption culture. This is when the phone rings or a customer walks in the front door, and you almost hear people say, “Oh darn. There is a customer” — you are interrupting their day.
“If you don’t work on your culture, the interruption style ends up becoming the default culture in a lot of businesses,” Barhorst says. “The culture element really characterizes how to act as well as what to do with customers — or with employees or with your vendor partners.
“You see so many people talk about the one way they want to be but then you look at how they treat their employees, and you realize, ‘Well, if you’re going to live that culture, you’ve got to live that in your entire business.’ You’ve got to treat your employees, the people who are supporting you, your vendors or your partners in business and your customers all the same. You can’t have a different culture for those people, or those things, because that dismantles the effort, it’s not aligned, and the company blows up because of that.”
Most companies have a mission statement and a vision statement as well as a set of core values or behaviors as important elements of the culture. These in a way can be used as metrics.
“We kind of think of them as our measurements or our ways that we want to be,” Barhorst says. “So if you look at them in general, they are teamwork, dedication, attitude, communication, goals or objectives and respect — those are the measurement devices or the things you aspire to be. Then you build them on a foundation of a process or program.”
Use continuous learning as a tool
Customers who call wanting your help are not an interruption and a company should be thankful for them. To drive home that attitude to employees, a process called repetitive continuous learning is very useful.
“When you graduate from college, and you get into a professional environment, you really stop practicing, you really stop learning,” Barhorst says. “You might go to a training seminar, or you might go something to learn a new system for your business or whatever, but you don’t really practice. You don’t do your math tables like you did when you were in the third or fourth grade.
“Repetitive continuous learning is the practicing of the same thing over and over — you keep teaching the class over again,” he says “Over time, their proficiency, their learning, their skills grow.”
To analyze the most effective way to teach continuous learning, use a model originated by Gordon Training International about the four stages of competence:
“The first stage is what I would call ‘ignorant bliss,’” Barhorst says. “It’s what they call unconscious incompetence.”
The employee does not know how to do his task and does not recognize that it’s a problem. To move on to the next stage, the employee must acknowledge the lack of knowledge and want to learn the new skill.
“Then you can move up so you discover something and you advance to conscious incompetence, where you are unsettled about something — ‘Now I learn that I am consciously incompetent about this,’” Barhorst says.
Next, you start learning and you become consciously competent, or driven to do something.
“Then ultimately, hopefully, you get into the zone and you become unconsciously competent,” Barhorst says. “A good example is like driving a car. If you have any kids or you know someone who’s ridden in the car, they probably have the knowledge of how to drive a car but they don’t have the skill to drive the car. You have to transition that.
“When I talk about that repetitive continuous learning from a perspective of the fact that I’m in ignorant bliss and I need to be unsettled, I need to be learning every day, learning something — that’s kind of the core piece that we use or apply to the business.
“We continually teach our employees that this is the mindset that you should have. Teach them to ask themselves, ‘Maybe I don’t understand where this is coming from. Maybe I’m in ignorant bliss. Maybe I need to ask some questions. Maybe I need to get unsettled about this. Why is this important?’”
Then it’s time to reinforce the core values in respect to the measurements of where you want to be.
“We call it ‘Always say please and thank you,’” Barhorst says. “The thank-you part is pretty easy. It’s about being thankful and being gracious and thankful for the opportunity you have. The ‘please’ part involves a lot more.”
Barhorst’s PLEASE acronym is not just about selling a product, it’s about developing the person.
“P is for passion,” Barhorst says. “Are you passionate about the business, about what you are doing? If you’re not, life is too short. Go find something you are passionate about.
“The L is for learning. Are you learning something every day? You have to understand that people should learn from their mistakes and from their successes. So many of us chastise people over failure and you can’t do that.
“The first E is for enthusiasm. Are you enthusiastic? I will tell you this, of all the things that we do, this is the one you can ‘fake it until you make it.’ If you act enthusiastically, you will become enthusiastic. It really is, ‘You reap what you sow’; that’s a self-fulfilling prophecy, rooted in enthusiasm.
“The A stands for action. You’ve got to have a bias for action. A great plan poorly executed will never outperform a poor plan greatly executed. That’s all about action. Take action. Some action is better than no action in every case.
“The S stands for skills. Skills is an interesting subject because if you poll or talk to people, they believe that knowledge is what pays the bills. I know a lot of smart librarians who don’t make very much money. In order to convert your learning to a skill, you must take action. There must be physical practice, physical action to convert your knowledge to a skill. Skills are what pay the bills.
The last E is for Educating. Are you taking what you have learned and teaching other people? It could be a customer; it could be a colleague on your team. It could be a peer. It could be a vendor. It could be your child or just a friend. Are you sharing that? “PLEASE is actually a circle or a wheel and you can put whoever you want in the middle. Put the customer in the middle, you can put anything in your life in the middle. All of those concepts will apply to that situation.”
Now in its 19th year, Iscential is a $60 million company with about 100 employees and is a captive hybrid agency representing more than 50 insurance carriers
“Some employees have been here 15 years,” Barhorst says. “You can actually see when we brought people in by the length of time they are with the company. So there are two or three guys with 13, 14 or 15 years of experience.
“Then there’s a bigger group of people with 10 years of experience, and a bigger group of people with five years of experience as the company has grown. That bucket of people stays around. But the bigger thing for me was to see how people have developed, how they have changed over time, to watch them interact at a company function and see how well they like each other.”
How to reach: Iscential, (800) 582-4368 or www.iscential.com
The Barhorst File
Born: I was born in Dayton, Ohio. My father worked for Honeywell for 42 years. He grew up in the Cincinnati area, moved to Dayton in probably 1963 or ‘64. We moved to Texas in 1972, and I have lived in five houses in the same neighborhood in Texas.
College: I went to Texas A&M University and studied industrial distribution.
What was your first job?
I probably always had been an entrepreneur. I had a paper route as my first job. I had a pretty good lawn mowing business when I was 12 or 13. My first W-2 paying job was as a busboy in a restaurant called Hickory Hollow. Its claim to fame was the biggest chicken fried steak and baked potatoes in Texas. But the chicken fried steak was kind of a trick. They would take chicken fried steaks, put them on a 25-inch pizza plate together then pour the gravy over them, and it looked like just one giant steak.
What was the best business advice you ever received?
My father-in-law, Ray Highsmith, told me something. I used to worry about outside influences on our business. His advice to me was to just spend very little time worrying about those outside influences. You can’t control them, so just focus on some (that) you can control. It was great advice from him. He is a very dear friend of mine.
Who do you admire in business?
I have a lot of people who I admire; most of them are nonfiction authors because I read a lot, and I admire them because of their creativity, and thought process — that they can come up with an idea: Malcolm Gladwell; Marcus Buckingham; Larry Bossidy, who used to run Honeywell; Jon Gordon and “The Energy Bus.” I look at those people more just because the creative side of them makes me in awe of their skill sets.
What’s your definition of business success?
Happiness. Shawn Achor is an author from Waco, Texas. He went to Harvard and wrote a book called “The Happiness Advantage.” Achor says it best in his book. People try to become successful to get happy, and the reality is happiness drives success. If you’re happy, everything else doesn’t matter.