Recently, union leaders at the Long Island Railroad and representatives of the Metropolitan Transportation Authority finally reached a deal to avoid a strike. If a strike had occurred, businesses would have faced a potentially significant loss of employee productivity as more than 300,000 daily commuters travel to and from Long Island each day. While employers thankfully avoided the worst, it did leave them scrambling to understand their payroll obligations in preparation for the strike. We thought it prudent to quickly revisit some of the wage and hour issues that have arisen over the past few weeks so that you won’t be caught off guard during the next threatened strike, weather emergency or other event that may prevent your employees from reaching the workplace.
As a general rule, the federal Fair Labor Standards Act does not require employers to pay non-exempt employees for missed work time resulting from a transportation shutdown or because of other events that prevent them from reporting to work. Of course, this rule does not excuse an employer from paying non-exempt employees for the time it requires them to spend working from home or some other remote location.
As employers are sometimes unaware, however, exempt employees must be paid their entire weekly salaries for any week in which they work – even if they work a partial day. Employers are also required to pay exempt employees when they decide to close down the office and the employee is ready, willing and able to work. A few options are available for minimizing the costs associated with this payment requirement, such as applying accrued vacation and other paid time off to days exempt employees are absent from work or, if certain conditions are met, treating full-day absences as unpaid leave. Of course, those measures should be weighed against the possible decline in employee morale that may result. In addition, in the unfortunate event that a transportation closure or other event prevents an exempt employee from reporting to work for a full week, the employer is not required to pay the employee for that week.
Many of the legal and practical considerations employers must address when external forces prevent or severely impede workplace access vary by industry and offer no obvious solutions. Most retail and food service establishments, for instance, simply cannot function unless employees report to work as scheduled. As a result, these employers may find it necessary to require employees to adhere to their regular schedules or face docked pay or termination regardless of whether their primary means of transportation have been rendered inoperable due to circumstances beyond their control. If employees in these circumstances incur additional costs in getting to work, such as using a car service or some other more expensive form of transportation, an employer is generally not be responsible for reimbursing this expense since regular commuting time is ordinarily not compensable. From a practical standpoint, however, employers should consider whether covering or at least sharing in these costs with key employees who keep an employer’s business running is a worthwhile expense given the absence of attractive alternatives.
In other types of businesses, where employees’ schedules can be altered without negatively impacting company performance, allowing employees to utilize alternative modes of transportation that delay their arrivals but still permit them to get to work may be the best option. Following 2012’s Hurricane Sandy, some forms of transportation into Manhattan resumed operations in a relatively short period of time while others took weeks or months to get up and running. As a result, many employers authorized employees whose commutes were disrupted to arrive at the office later and either stay later, perform some work remotely or make up the lost time in some other way. This enabled employers to maintain productivity at near pre-storm levels without the need to pay additional wages or reimburse commuting costs.
Despite the necessity of moving quickly to reallocate resources and continue operations in the face of sudden, unexpected personnel shortages, employers that fail to properly address variations in payroll obligations in accordance with state and federal wage and hour laws do so at their own peril. Enforcement agencies and plaintiffs’ attorneys expect employers to understand the distinctions regarding compensation requirements for exempt and non-exempt employees when external circumstances prevent access to the workplace. As is often the case, consulting counsel about these matters prior to receiving an audit or agency charge can reduce costs considerably.