« Business Continuity

Business continuity plans should include payroll clauses

Do you know how to compensate your employees in the wake of a natural disaster?
Do you know how to compensate your employees in the wake of a natural disaster?

Whenever a natural disaster occurs in a local community, employers and employees alike are on edge to find out if the office will be able to open the next day. Damage to the office that affects workers' schedules can greatly impact how pay will be disbursed.

For example, an executive may announce that the business is open, but residents of some neighborhoods are unable to travel to work—is the staffer entitled to pay? Or what if doors are closed and some staff members volunteer to help the employer clean up debris, should they seek compensation? It may be difficult to address questions about pay at this time, but employers can mitigate these concerns with a business continuity plan in place.

"[W]age and hour obligations are not waived during natural disasters, and as such, employers must be mindful of their obligations," JD Supra Law News contributor Tiffani McDonough  writes.

Many payroll requirements around these concerns vary by state, but nonetheless it is important for employees to get their paychecks on time. If they are late, "some states impose financial penalties on an employer for each day a check is late," McDonough added. Business owners can make the most out of their payroll if they are aware of the requirements laid out under the Fair Labor Standards Act for non-exempt and and exempt staffers. On top of that, employers have to be aware of local labor laws as well.

Sending workers home early

Some mornings may appear gloomy, but that doesn't stop workers from getting to work. In situations where conditions may impact the afternoon commute, some businesses may decide to close early. Non-exempt employees may be paid on a per-hour basis, whereas exempt members must receive an entire day's worth of pay.

When the business is closed

This largely depends on how long the business had to halt operations. If it is closed for less than a week, an exempt employee must receive full compensation for that week, whether resources derive from the individual's paid time off package or not. However, non-exempt workers only need to receive pay for the time they actually worked because they get paid on an hourly basis. If the company remains closed for more than a week, then compensation is not required for exempt workers for any full work weeks during which the business is closed.

If a non-exempt worker is "on call" during a natural disaster, he or she "must be paid for every hour on call" because the staffer has no flexibility in their schedule, JD Supra Law News explains. 

Despite these requirements that are in place, businesses can create a plan that meets the demands of the organization and its workers. Business continuity consultants can help develop a plan that accounts for this and many other concerns.