Do Employees Get Paid during Shutdown Caused by Power Outage?

Are businesses required to pay employees during power outage shutdowns?   Many companies have faced an emergency shutdown due to power blackouts, so it is important to know whether you need to pay employees during those shutdowns.  Pay requirements differ by employee classification and by state law.

Do you pay employees during an emergency closure?

You’ve lost power to your business and are unable to stay open. Not only do you lose income from the lack of sales or the lack of productivity, you need to decides what to do with your employees. Are you required to pay them even though they can’t do their regular work?

The answer is “yes”,  ”no”, and “sometimes”.

It really depends on the employee’s classification and if you’ve been able to get them advanced notice. So let’s break it down by employee type:

Hourly Employees

You do not have to pay hourly employees who cannot work their shift when your business is closed down due to an extended emergency like a power outage due to high winds. To prevent confusion on this point, it is best to have a written policy stating that you do NOT pay during closures due to inclement weather or natural disaster. But there is an exception in certain conditions, so read on.

Some states do insist on Reporting-to-Duty pay that says you must pay any employee who shows up to work as scheduled even if there is no work available.  Among those states are CA, CT, DC, MA, NH, NJ, NY, OR and RI, though some limit it to certain industries while others only to minors (OR).  So even if the business is closed, if the employee makes it to the worksite you have to pay.  The rules differ by state on Reporting-to-Duty Pay, but they usually require a half-day’s pay: 2 hrs minimum, 4 hrs maximum.  Some states also limit Reporting Time Pay to just those who are scheduled to work 4 or more hours.  See your particular state’s website for details on applicable labor law.

In California, you do NOT have to provide Reporting Time Pay  if the utilities are off:

Q. Are there circumstances where reporting time pay doesn’t apply?
A. Yes, there are a number of instances whereby an employee reports to work as scheduled and is sent home immediately, or works less than half his or her usual or scheduled day’s work and is not entitled to reporting time pay.No reporting time pay is due:

  1. When the employer’s operations cannot begin or continue due to threats to employees or property, or when civil authorities recommend that work not begin or continue.
  2. When public utilities fail to supply electricity, water, or gas, or there is a failure in the public utilities, or sewer system.
  3. When the interruption of work is caused by an Act of God or other cause not within the employer’s control, for example, an earthquake.

Want to read more? Link to the rest at the California Department of Industrial Relations.

Salaried Employees

Salaried exempt employees must be paid if they work anytime during a workweek and are available to work the remaining days, whether they actually work or not.  You cannot cut an exempt employees pay just because you cannot get your full 40 hours out of them this week, just like you do not have to pay them OT during those busy weeks when they work more than 40 hrs.

Be sure you have your employees correctly classified.  Some businesses think they can classify anyone as Exempt, but that is not true.  Generally, these jobs demand an advanced degree, pay in commissions, or are an executive position.  The usual employees who can be exempt are:
1. Upper Management
2. Certain Other Management
3. Certain Creative Professionals
4. Certain Advanced-degree Professionals
5. Certain High-Paid Technical Employees
6. Certain Highly Commissioned Sales People

Plan Ahead for Possible Emergencies

Be prepared in case of an emergency shutdown by having an up-to-date contact list for your employees.  If your business must close, especially for more than a day, then call all employees and revise their schedules as needed.

Have the correct policies in place: Once again, this is an area where a good Employee Handbook can help.  Set up your employee policies for OT, Exempt Employee Deductions, Inclement Weather, Natural Disaster, and Report to Duty Pay.  Consider a professionally designed Employee Handbook, customized to your business.

Typical call-in procedures:  Your written bad weather policy  should tell your employees what is expected of them.  Usually, it will state that they are to call-in (if phone system is operating).  The call-in is considered an excused absence.  If you pay for bad weather days, you should state the amount of hours and who is eligible (full-time? part-time? temp employees?).

What is considered “bad weather”?  Your written policy should give examples of what is considered inclement weather.  Some typical weather reasons are: snow, whiteout, ice storm, severe flooding, dust storm, hurricane, tornado warning.    (You should also add a paragraph on closure due to such as earthquake, explosion, fire, utility outage, or terrorist attack.)

Have your policy in writing. It is important that you let your employees know what your policy is whenever a shutdown should occur. The best way is to get your Bad Weather Policy in writing before the event happens.

As part of any Employee Handbook, you should have a policy for inclement weather, stating your pay policy (usually it is “day off without pay”), call-in procedures, and examples of what is considered “bad weather”.

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