How to handle time off and pay for weather-related absences

Jenny Swinerton, General Counsel, Sequent

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 protected]

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P&G CEO’s pay down 6.1 percent after tough year

CINCINNATI, Fri Aug 24, 2012 – Procter & Gamble Co. Chairman and CEO Bob McDonald took home a little less last year after disappointing results that he is trying to reverse with a major overhaul.

McDonald, the leader of the world’s largest household products company since 2009, earned nearly $15.2 million in the year ended in June, down 6.1 percent from $16.19 million in fiscal 2011, according to a filing P&G made with the U.S. Securities and Exchange Commission on Friday.

P&G, whose brands include Pampers, Gillette and Tide, is in the midst of a $10 billion restructuring. On top of that, activist investor William Ackman bought roughly $1.8 billion worth of its stock this summer. While Ackman has not yet pushed for any changes at the company, P&G’s board came out in July in support of McDonald and his turnaround plan.

In June, P&G took the blame for a lack of big new products and not cutting costs fast enough as demand slows in some major markets. McDonald said it would take time to reverse the negative trends and that he expected little improvement in fiscal 2013, which began on July 1.

McDonald’s salary was flat in fiscal 2012 at $1.6 million. With 89 percent of his total pay tied to the company’s performance, his overall payout declined as P&G’s results came in below target. His bonus fell by $200,000, to $2.43 million.

Most of McDonald’s compensation comes in stock and option awards. Their combined value fell 8 percent to $10.85 million.

Shares of P&G were down 0.3 percent at $66.49 in early trading. The shares fell 3.6 percent to $61.25 during fiscal 2012.

Google to pay $22.5 million to settle privacy charges: WSJ

PALO ALTO, Calif., Tue Jul 10, 2012 – Google Inc. is close to paying $22.5 million to settle charges that it bypassed the privacy settings of customers using Apple’s Safari browser, the Wall Street Journal reported, citing officials briefed on the settlement terms.
The fine would be the largest penalty ever levied on a single company by the U.S. Federal Trade Commission, the Journal said late Monday.
The charges involve Google’s use of special computer code, or “cookies,” to trick Apple’s Safari browser so Google could monitor users that had blocked such tracking, the newspaper said.
Google disabled the code after being contacted by the Journal. According to Google, tracking of Apple users was inadvertent and did not cause any harm to consumers, the newspaper reported.
“The FTC is focused on a 2009 help center page. We have now changed that page and taken steps to remove the ad cookies,” Google told the Journal.
Google also faces potential sanctions from other governments. It is being investigated by the European Union to determine if the company complies with Europe’s stricter privacy laws, the Journal reported.
An FTC spokeswoman declined to comment to the Journal.
Google and FTC could not be reached for comment by Reuters outside regular U.S. business hours.

Citigroup CEO Pandit and directors sued over executive pay

NEW YORK, Fri Apr 20, 2012 – Days after being rebuked by shareholders, Citigroup Inc. CEO Vikram Pandit and the bank’s directors have been sued by a shareholder accusing them of awarding outsized pay to top executives.

The complaint, filed Thursday in Manhattan federal court, said directors breached their fiduciary duties by awarding more than $54 million of compensation in 2011 to the executives, including $15 million to Pandit, though the bank’s performance did not necessarily justify it.

At Citigroup’s annual meeting on Tuesday, about 55 percent of shareholders participating in an advisory vote rejected Pandit’s pay package. That marked the first time that investors had rejected a compensation plan at a major U.S. bank.

That vote “has cast doubt on the board’s decision-making process, as well as the accuracy and truthfulness of its public statements,” said the complaint, brought by shareholder Stanley Moskal. “Absent this (lawsuit), the majority will of the company’s stockholders shall be rendered meaningless.”

Citigroup spokeswoman Shannon Bell said the lawsuit is without merit and that the bank will seek its dismissal, “consistent with court rulings in similar cases.”

“The board takes the shareholder vote on executive compensation very seriously and will consult with representative shareholders to better understand their concerns,” she added.

CEO salary suggests Wall Street may be waking up

NEW YORK – Capital markets in 2012 are better than they were in 2011, Morgan Stanley Chief Executive James Gorman said on Wednesday, adding that his bank is in a “very good position for Basel III standards.”

Gorman, speaking to CNBC from Davos, Switzerland, said confidence will rise after euro zone stability improves, while stressing that Morgan Stanley is in a very solid position. “If you had all sovereigns, all corporates and all financial institutions blow up in Europe at the same time, Morgan Stanley would still be fine,” he said.

Gorman also said Morgan Stanley would not need to raise capital in the near term. Morgan Stanley’s capital levels have been a concern for investors because it will need to comply with new, stricter rules set by the Basel Committee and U.S. regulators.

The Basel III accord, agreed to by the Basel Committee, an international group of regulators, will require banks to hold at least 7 percent of core Tier 1 capital in the form of retained earnings or pure equity.

There are also concerns because Morgan Stanley may need a big chunk of cash to purchase the next stake of its Morgan Stanley Smith Barney venture from Citigroup Inc.

Morgan Stanley currently owns 51 percent of the wealth management business and has the option to buy another 14 percent in May at fair market value. Gorman reiterated his commitment to buy the business on Wednesday, a purchase he said will take a priority over stock buybacks or dividends in the near-term.