Health consequences aside, pandemics can wreak havoc on businesses, upending supply chains and employment models around the world. To help curb the spread of disease, public health officials may recommend that employees work from home, be placed on furlough or work fewer hours. In addition, the U.S. Department of Labor may provide guidance on how U.S. employers should handle wages during the pandemic.
For instance, the DOL’s COVID-19 and the Fair Labor Standards Act Questions and Answers page addresses federal wage-and-hour issues related to the novel coronavirus. However, your wage-and-hour responsibilities do not stop there, as you must also consider state and local mandates.
3 Wage-and-Hour Concerns That Typically Arise During Emergencies
1. Should nonexempt employees be paid for hours not worked because of a pandemic? The Fair Labor Standards Act (FLSA) requires you to pay nonexempt employees only for hours worked. Therefore, under the FLSA, you do not have to pay nonexempt employees for hours not worked during the pandemic. You also do not have to pay them for hours they were scheduled to work but ended up not working.
Be sure to check state law, as some states require reporting-time pay for nonexempt employees who show up for work as scheduled but are sent home. The state may waive your reporting-time pay obligation if you were forced to close your business because of the pandemic.
2. Should exempt employees be paid for hours not worked during the pandemic? No matter the situation, FLSA-exempt employees must receive their full pay for any workweek in which they do any work. Even if they worked for only a few minutes during the workweek, they must still get their full pay for that week. If they were fully relieved of their duties for the workweek, you do not have to pay them for that week.
3. Should employees receive paid time off for reasons tied to the pandemic? If the federal, state or local government requires paid leave for reasons linked to the pandemic, you must compensate your employees accordingly. For instance, see the DOL’s Families First Coronavirus Response Act: Questions and Answers for guidelines on paid leave associated with COVID-19.
Unless prohibited by state or local law or an employment contract, you can mandate that employees use their accumulated paid time off to cover pandemic-related absences.
Note that the above three rules stand regardless of whether the employees work from home or at your location. Further, employers cannot use the pandemic as an excuse for not following federal, state or local wage-and-hour laws.
Pay attention to not just the FLSA, but also employment contracts and state final pay rules — which are often triggered during pandemics.
We will continue to update you as we get more information on coronavirus-related legislation and guidance that may impact you. Continue to check back here for the most up to date tax information and changes in response to coronavirus. If you have more questions contact an MCB Advisor at 703-218-3600 or click here.
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