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FLSA FAQ: The FLSA and Coronavirus: Paying Employees during the COVID-19 Outbreak while minimizing Wage and Hour Risk

The Coronavirus (COVID-19) outbreak, first identified in Wuhan, Hubei Province, China is increasingly creating challenges for employers in the United States seeking to protect their workforces and customers, and maintain continuity of operations. While much of the focus has understandably been on those critical areas, decisions that employers make when facing this or any pandemic or other unusual emergency event carry wage and hour implications, too.

Depending on particular situations, employers may find themselves requiring employees to telecommute, take mandatory leave, or work reduced schedules. Fortunately, while the coronavirus may be novel, these Fair Labor Standards Act (FLSA) issues are not.  In this post, we will take a look at the common wage and hour issues raised by the coronavirus outbreak and other situations like these.

Let’s start with the biggest one, judging by searches coming into this blog:

Q: Do employers have to pay employees who are away from work due to concerns of/actual exposure to the coronavirus?

The answer to this question depends on your answers to some other important questions:

  1. Will the employee perform any work while they are away from the office?
  2. If they are exempt employees under the FLSA, will they likely perform some work, no matter how minimal, during a workweek when they are away from the office?
  3. Is the employee actually ill?
  4. What do your policies, past practices, employment agreements and–for unionized environments–collective bargaining agreements (CBAs) say about employees in these situations?
  5. Are there any applicable state or local paid leave or scheduling laws?
  6. Did any potential or actual exposure occur in connection with work or personal activities/travel?
  7. Will your business otherwise be open during any periods the employee is away from work?

Answering these questions will likely lead you to the best answer for your situation. Another excellent resource is the Department of Labor’s (DOL) Fact Sheet #72: Employment and Wages Under Federal Law During Natural Disasters & Recovery. Much of the guidance here, while generic and applicable to any disaster, is relevant to the current coronavirus outbreak. However, we’ll go through a few specifics below. As the questions above suggest, the answers potentially differ based on whether the employee is exempt or non-exempt from overtime.

Exempt Employees

With limited exceptions (such as full-day or partial-day absences taken as unpaid leave under the Family and Medical Leave Act), under the FLSA, if an exempt employee performs any work during a workweek, employers must pay them their full week’s salary. This is important for telecommuting or employees who use phones or other devices to take calls or answer e-mails. Unless you physically block access to your network for employees on leave, my experience tells me that most employers need to expect that exempt employees will perform at least some amount of work during a week. That means that closing a workplace due to a coronavirus outbreak may not eliminate the obligations to pay exempt employees, even if the closure extends beyond a full workweek.

Importantly, employers may not deduct from an exempt employee’s salary for absences occasioned by the employer, such as when an employer decides to close a workplace because of the coronavirus. Of course, employers can require employees to use accrued leave (such as vacation or PTO) for days they are required to stay home by the closing and may require exempt employees to make up lost work time.

Making improper deductions from an exempt employee’s salary may lead to the destruction of the required “salary basis” for maintaining the exempt status, arguably entitling the now-formerly-exempt employee to overtime premiums.

Non-exempt Employees

Employers must pay non-exempt employees for time they actually work. In other words, employers are not required to compensate non-exempt employees absent from work, no matter the reason. During a coronavirus-related closing, under the FLSA an employer can send non-exempt employees home or cancel their shifts without pay for the time they would otherwise have worked. However, employers must compensate non-exempt employees who perform work, regardless of whether they are in the workplace. For example, if an employer closes a workplace due to the coronavirus, but requires or permits non-exempt employees to work from home, they must be paid for the hours worked.

Why is “under the FLSA” in italics? Increasing numbers of states and localities have enacted legislation and regulations addressing these situations. Cities such as Seattle and New York City now require employers to pay schedule change premiums or penalties if they fail to provide sufficient notice to an employee of a change or cancellation of a shift. Others require premium payments when employees do not get a specified rest period between shifts, often referred by the portmanteau “clopening.” (Clopening describes when an employee works until closing and then returns to work the opening shift the next day.) These rules do not exempt the coronavirus or other emergencies.

Q: Must employers pay employees who work a reduced schedule due to a closure, a slowdown, or changes to business hours?

From the FLSA standpoint, no. Federal law does not set a minimum hour requirement for exempt or non-exempt employees. However, see my answer above about state and local laws. We can also throw collective bargaining agreements in the mix, too. State and local laws and CBAs often do have requirements for minimum hours, advance notice of changes to schedules, and “show up” pay for closures. Proceed carefully before assuming that federal law controls your particular workplace.

Q: What happens a non-exempt manager or executive has to perform work normally performed by non-exempt employees to ensure the business can continue operating when employees are kept out of the workplace due to the coronavirus?

This question comes up more frequently during weather emergencies or other disasters, and the answer is the same for non-coronavirus-related emergencies. Under the FLSA, employees can hold only one status: exempt or non-exempt. Exempt employees do not lose their status as exempt employees simply because they perform non-exempt work (even exclusively non-exempt work) due to a bona fide emergency.

Emergencies do not include events within the employer’s control and those that it can address in the normal course of business. Emergencies should be rare–like the coronavirus outbreak for now–and events you cannot reasonably anticipate. In addition, check local laws and, particularly, CBAs that impose other limitations in these situations.

Q: Can employers require employees to use accrued vacation/PTO during mandatory time off due to coronavirus issues?

The FLSA generally does not address leave policies. In 2005, the DOL released an opinion letter that answered this question in more detail. As the DOL explained, “since employers are not required under the FLSA to provide any vacation time to employees, there is no prohibition on an employer giving vacation time and later requiring that such vacation time be taken on a specific day(s).” However, employers should look to state and local laws and CBAs, as well as their own policies and practices to determine what it can or cannot do with paid leave in this situation.

Q: What can employers do to go above and beyond the law? 

This was not one of the questions, but it should be! Like any other emergency, your decisions as an employer will affect your employees’ views of your business and their morale. Even if you can permissibly do something under the FLSA or state and local laws does not mean that you should.

The possibilities for going above and beyond the law are almost limitless:

  • Let your employees telecommute
  • Use business interruption insurance coverage to compensate not just your business but also your employees for their lost pay
  • Award additional paid (or unpaid) time off to affected employees
  • Institute leave sharing/donation plans for employees who may have limited leave balances
  • Work with your payroll provider or third parties to provide wage advances or low- or no-cost loans to affected employees
  • Support food, clothing, and other aid drives
  • Fund disaster relief programs or participate in ones in your community

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