When your organization is hit by a natural disaster, it's critical to understand the ins and outs of paying employees during a disaster.
When an organization is hit by a natural disaster, just by the very nature of the calamity, industries themselves are bound to face many hurdles in the coming weeks, months, and possibly years after the event strikes. And while simply paying employees during a disaster and making sure their long-term interests are being looked out for can be challenging, they are still essential operations any organization must be prepared for.
When disaster strikes, as it did when Hurricanes Harvey and Irma struck the southern U.S. in August and September 2017, businesses took a huge hit. And while public safety, including the safety of your employees and customers, is the perennial top priority, disasters also create a number of challenging issues for HR leaders and the business itself.
Business Continuity During Disaster
Clearly, the time to develop organizational readiness for a disaster is long before a natural disaster hits. You need an emergency plan that explains what your people should do in different scenarios, including when the business should close and how communication with key stakeholders (employees, suppliers, customers, etc.) should happen. Planning to protect your people, your resources and your data are critical components of organizational continuity.
Take caution when it comes to closing and reopening your business during a disaster. These are times of danger to public safety, and can take an emotional toll on the entire community. A smart organization shows that it's part of the community by reflecting the concerns of its employees and customers, especially around safety.
Paying Employees During a Disaster
The rules for paying employees during a disaster are set by the Department of Labor (Fact Sheet #72) and the Fair Labor Standards Act (FLSA). Here are three common rules regarding paying employees during a disaster. Remember, though, that these are only general guidelines and do not replace the advice of an attorney to address your particular situation, including any state or municipal laws that may apply.
1. You are only required to pay non-exempt, or hourly employees, only for the hours they actually work. So if the business is closed, and the employees provide no work, you are not obligated to pay them.
2. Even if you are closed, you are likely required to pay your exempt, or salaried, employees. However, you may require exempt employees to use their allowed leave time for periods when you're closed.
3. If an exempt employee can't make it into work when the business is open because of a transportation issue, the DOL considers this to be an absence for personal reasons. The Society for Human Resource Management reports that an organization can put exempt employees on leave without pay, or require the use of paid vacation time.
Keeping your employees engaged during times of disaster goes beyond compliance. While you might not have to pay them under certain disaster-related scenarios, HR leaders should consider the long-term engagement cost of not paying employees during a disaster. Essentially, you may end up getting what you pay for — or more appropriately, what you don't pay for.
Don't let a natural disaster destroy your long-term business continuity, and make sure you're prepared in the short-term when Mother Nature strikes. You can maintain employee engagement during a time of disaster by knowing applicable regulations and how they might impact your staff.
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