Whether a NJ employer forced to shut down its operations as a result of Hurricane Sandy, or related event, is required to pay wages for the period of closure depends, in large part, on the classification of the affected employee under federal and state wage and hour laws.  In other words, is the employee an hourly, “non-exempt” employee or an “exempt” employee, typically defined as an executive, administrative, and/or professional employee?  Once the employee’s “exemption” status is determined, the following general guidelines will probably apply.

Non-Exempt Employees: Generally, the Fair Labor Standards Act (”FLSA”) does not require employers who are unable to provide work to employees due to a natural disaster to pay non-exempt employees for hours the employees would have otherwise worked. Whether the closure spans a single day or an entire week, an employer typically is not required to pay wages for actual time not worked.

Exempt Employees: Under the FLSA, if an employer’s closure due to inclement weather lasts less than a week, the employer must generally pay an exempt employee’s full salary for the week.  When the business shuts down for a full week, and the exempt employee does not perform any work during that week, the employer usually has no obligation to pay the employee for that week.  Typically, if an exempt employee has accrued, unused vacation or paid time off, the employer may reduce the time off available to the employee.  However, such a determination should not be made before consulting any applicable employee handbook or other policies.

To possibly ease the burden of an employer’s business decisions following Hurricane Sandy, affected employees may qualify for some form of state unemployment insurance or federal disaster unemployment assistance.  The State of New Jersey Department of Labor and Workforce Development may be a helpful resource for employees and employers alike to consult.

While this blog entry is designed to frame some of the basic wage and hour issues facing NJ employers following shutdowns related to Hurricane Sandy, we understand that there may be a number of other complex employment and other issues that may arise for employees in the wake of the storm.