Employees & Layoffs
The answers to each of the following questions are based on the assumption that the affected employees are not covered by a collective bargaining agreement and do not have an employment contract with their employer. In the event that the affected employees are covered by a collective bargaining agreement or an employment contract, the employer should consult the terms and conditions of those agreements and contracts. Similarly, if the employer has certain established employment policies, the employer should consult and comply with its policies.
Worker laws can be either state or federal. Federal labor laws apply to all workers in the country while state laws apply in their own areas. Some states make few laws of their own and rely mainly on federal law to regulate employer-employee relations, while others set their own laws.
Does an employer have to pay its employees for the days that the business was closed as a result of the disaster and its aftermath?
The answer to this question depends on whether the employee is considered an “exempt” employee or a “non-exempt” employee for purposes of federal and state wage-and-hour laws. Every employee must be treated as either exempt (not entitled to premium pay for overtime hours worked) or non-exempt (entitled to premium pay for overtime hours worked) under federal and state wage-and-hour laws.
The determination of whether an employee is “exempt” or “non-exempt” is a complicated, fact-specific determination. Generally speaking, an employee is considered a non-exempt employee if the employee is paid on an hourly basis and not on a salary basis. In contrast, to be considered an exempt employee, an employee must be paid on a salary basis and must have certain job duties and responsibilities that are executive, administrative or professional (among others) as required under the applicable wage and-hour laws.
An employer is not required to pay its non-exempt employees for any days or hours that the employees did not work because the business was closed following the disaster. The employer is, however, required to pay the non-exempt employee for any hours worked prior to the disaster. An exempt employee should receive his or her full salary for any week in which he or she performs any work without regard to the number of days or hours worked. Thus, if an exempt employee worked on Monday, May 20th, but worked no other days during the week, then the employer should pay the employee his or her full salary for that week.
If an employer’s records were destroyed as a result of the disaster and its aftermath, what basic payroll records does the employer need to try to recreate?
Under federal law, every employer must establish, maintain and preserve weekly payroll records, including the following information for each employee:
- Employee’s full name, as used for social security purposes
- Address, including zip code
- Birth date, if younger than 19
- Sex and occupation
- Time and day of week when employee’s work week begins
- Hours worked each day and total hours worked each workweek
- Basis on which employee’s wages are paid
- Regular hourly pay rate
- Total daily or weekly straight-time earnings
- Total overtime earnings for the work week
- All additions to, or deductions from, the employee’s wages
- Total wages paid each pay period, including money paid in cash
- Date of payment and the pay period covered by the payment
There is no special rule relieving employers of this obligation in connection with a disaster.
When must an employer pay its workers if the employer’s payroll records were destroyed?
Any organization employing as many as 50 or more employees must make full payment to employees for services performed as often as once every two weeks, or twice during each calendar month. This payment must include all amounts due for labor or services performed up to not less than 15 days previous to the time of payment.
Does an employer have to reimburse its employees for the destruction or loss of any of their personal items, such as personal computers or cars that they may have used for business purposes?
You should consult with your insurance provider to determine whether loss of employees’ personal property is covered by any insurance policy. Ordinarily, employers are not responsible for reimbursing employees for the loss or damage to personal property an employee chose to bring to the work site.
Once an employer reopens its business, does the employer have to pay its employees for the days on which a transportation problem or some other obstacle prevented them from reporting to work?
This also depends on whether the employee is considered an exempt or non-exempt employee. For purposes of wage-and-hour laws, the employer is not required to pay a non-exempt employee for any days or hours that the employee was absent from work due to a transportation problem or some other obstacle that prevented him or her from reporting to work. An exempt employee should receive his or her full salary for any week in which he or she performed any work.
May an employer require its employees to use their accrued vacation or sick leave to cover their absences from work due to the disaster?
Once the employer reopens, if an employee is unable to report to work due to the disaster, the employer may require an employee to use his or her accrued vacation or sick leave to cover his or her absences, provided that this is consistent with the employer’s leave policies and provided that the employee’s absence from work does not qualify as leave pursuant to the Family Medical Leave Act (FMLA).
Leave under the FMLA. The FMLA provides that a covered employee may take up to a total of 12 weeks’ unpaid leave during any 12-month period for certain qualifying reasons. During the leave period, the employer must maintain the employee’s health benefits and must guarantee that the employee will be reinstated to the same or an equivalent position.
The FMLA applies to only those employers that employ 50 or more employees for each working day in each of 20 or more calendar workweeks in the current or preceding calendar year. An employee is entitled to FMLA leave if the employee (1) has been with the employer for at least 12 months, (2) logged at least 1,250 hours of services during the 12-month period immediately preceding the start of the leave and (3) is employed at a work site where 50 or more employees are employed by the employer or within 75 miles of that work site. FMLA leave may be taken to care for the employee’s spouse, child or parent with a serious health condition or because of a serious health condition that makes the employee unable to perform the functions of the employee’s position.
Eligible employees are entitled to 12 work weeks of leave in a 12-month period for:
- the birth of a child and to care for the newborn child within one year of birth;
- the placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement;
- to care for the employee’s spouse, child or parent who has a serious health condition;
- a serious health condition that makes the employee unable to perform the essential functions of his or her job;
- any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter or parent is a covered military member on “covered active duty;” or
- twenty-six work weeks of leave during a single 12-month period to care for a covered service member with a serious injury or illness who is the spouse, son, daughter, parent or next of kin to the employee (military caregiver leave).
For compliance information, see http://www.dol.gov/whd/fmla/
Is an employee entitled to either paid or unpaid leave so that he or she can care for children or family members injured by the disaster?
If the employee is entitled to FMLA leave as described above, the employer must allow the employee to take FMLA leave. This leave does not have to be paid leave, but the employee may be able to use accrued vacation or sick leave for the absence. Also, if the employer has a specific policy providing for leave under such circumstances, the employer will be required to comply with its policy.
Is an employee entitled to either paid or unpaid leave if the employee is too afraid or emotionally traumatized to return to work?
If the employee is suffering from post-traumatic stress or some other mental condition, the employer may be required to provide the employee with unpaid leave under the FMLA. However, the employee will have to meet the applicable requirements of the FMLA, as set forth above. If the employer provides paid leave, the employee may be able to use his or her accrued vacation or sick leave for the absence.
Health and welfare benefits FAQ
Are there sources beyond or in lieu of employers’ own insurance policies to alleviate some of the financial burden caused by the disaster?
Many of the individuals injured by the disaster may be able to receive benefits from a number of sources, including federal government assistance, charitable donations and unemployment compensation. Thus, employers should, without delaying treatment for any employees or their dependents, pay special attention to the rules of their policies regarding subrogation and the order of benefit determinations.
What can employers do to help their employees recover psychologically from the trauma of the disaster and its aftermath?
Plans may experience an increase in mental health claims, as well as more requests for assistance under employee assistance programs (EAPs). Employers should advise their employees of the availability and importance of such counseling, both for themselves and their families. If an employer does not have an EAP, counseling and other related services are available on a fee-paying basis.
What should be done about Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage?
COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end due to a “qualifying event” (such as the death of the covered employee, termination of employment or reduction of hours sufficient to cause the loss of medical coverage). Employees self-pay the premium.
Once an affected employee loses coverage as a result of one of these events, the employer must take action to notify the plan administrator within the prescribed time period. Qualified beneficiaries must be informed of their right to continued health insurance coverage under COBRA within 44 days (the employer must notify plan administrator within 30 days, which must then notify eligible dependents within 14 days) of a qualifying event. All required notices regarding COBRA should be carefully documented and timely. Generally, the qualified beneficiary has 60 days from the later of (a) the date of termination of coverage, or (b) his or her receipt of a COBRA notice to elect to continue coverage. COBRA coverage can usually continue for up to 18 months for the employee and the employee’s dependents and for 36 months for family members of a deceased worker.
Does an employer have to provide its employees with any prior notice of termination if the employer determines that it is necessary to lay off employees?
No, if the employer does not have an established policy requiring that prior notice be given, the emergency circumstances of the disaster would relieve the employer of a notice obligation. Usually, employers with more than 100 employees may have an obligation to provide certain notice to its employees pursuant to the Worker Adjustment and Retraining Notification (WARN) Act. However, the WARN Act contains an “Act of God” provision if the layoff or shutdown is the result of a natural disaster. Note that employers with established policies requiring that prior notice be given may be required to comply with their policies.
Does an employer have to provide its employees with severance pay if the employer determines to lay off employees?
No, so long as the employer does not have a plan, policy or practice providing for the payment of severance benefits. The state laws of Missouri, as well as federal law, do not require employers to provide severance pay to departing employees.
Is a self-employed, small business owner eligible to receive unemployment insurance benefits?
No. Self-employed, small business owners (sole proprietorships and members of a partnership or limited liability company) as well as independent contractors are not eligible for unemployment insurance benefits. However, persons denied unemployment insurance benefits may be eligible for disaster unemployment assistance (DUA).
Workers who lost their jobs directly as a result of the disaster in the declared counties may quality for disaster unemployment assistance. Generally, those who are eligible for state unemployment benefits are not eligible for DUA, but a claimant may qualify if state unemployment compensation benefits are exhausted.
Those who may be eligible for disaster unemployment assistance include anyone who (1) no longer has a job; (2) was unable to reach his or her job; (3) was scheduled to start work in the major disaster area and the job no longer exists; (4) now serves as the breadwinner or major supporter of a family because the head of household died; or (5) cannot work because of an injury suffered during the major disaster.
Self-employed individuals must show a copy of their 2010 income tax records.
Note: If you are applying for DUA, call 525-1500 (inside OKC area) and 1-800-555-1554 (outside the OKC area)first to get a registration number.