What Happens When Workers Are on Call?

Due to the nature of your business, you may have some workers who are typically required to be on call.

If the office is closed due to a winter storm and on-call employees cannot effectively use the time for their own purposes, the FLSA says the employer must pay the employee for the on-call time. But employers don’t have to pay on-call workers who are at home and are free to use the time for their own purposes.

Note that this is the general rule under the FLSA. State laws may impose different or tougher requirements.

Background

Although state law may control outcomes, the relevant statute on the federal level, as well as in many states, is the Fair Labor Standards Act (FLSA). The FLSA, initially enacted in 1938 and modified numerous times since, establishes rules for overtime, minimum wages, record-keeping and other employment matters in both the public and private sectors.

The application of those rules often depends on the characterization of an employee as exempt or nonexempt. For instance, nonexempt employees arentitled to overtime pay, while exempt employees are not. Most employees covered under the FLSA are treated as nonexempt employees although there are numerous special rules and exemptions contained within the law.

Certain jobs are defined as being exempt, such as outside sales employees (inside sales employees are nonexempt). However, the classification generally depends on three FLSA tests: the salary level test, the salary basis test and the duties tests.

1. Salary level test: Employees who earn less than $23,600 a year ($455 a week) are nonexempt. Virtually any employee earning more than $100,000 a year is exempt.

2. Salary basis test: Generally, employees are paid on a salary basis if they have a guaranteed minimum amount of money to count for any workweek. This amount doesn’t have to be total compensation — in fact, it often is not — but it must be a finite amount. Some rules of thumb indicating that employees are salaried are:

• If they are paid by an annual salary divided by the number of paydays in a year; or

• When the actual pay is lower for work periods in which the employee logs fewer hours.

In any event, however, whether or not this test is met depends on the particular facts and circumstances.

3. Duties test: Employees who meet the salary level and salary basis tests are treated as exempt only if they also perform exempt job duties. These FLSA exemptions are limited to employees who perform relatively high-level work. Whether the duties rise to the level of an exempt employee depends on exactly what they are.

Mere job titles or position descriptions are of limited value. For example, a secretary doesn’t become exempt by being called an administrative assistant, nor do CEOs become nonexempt if they are referred to as clerks.

There are three categories of exempt job duties: executive, professional and administrative. Significantly, job duties are exempt executive duties if the employees:

• Regularly supervise two or more individuals;

• Have management as the primary duty of their positions; and

• Have some genuine input into the job status of other employees, such as hiring, firing, promotions or assignments.

You can find more detailed information on the differences between exempt and nonexempt employees here.

Winter Weather

If employees are forced to miss work due to inclement weather, the FLSA applies the following standards:

Exempt employees: If the business shuts down due to the weather, exempt employees must be paid their regular salary for any closing lasting less than a week. Under the FLSA, an employer cannot reduce exempt employees’ pay based on the quantity of the work if they are ready, willing and able to work, but work is not available.

Consequently, deducting pay when closing the office for less than a week could affect the employees’ exempt status. However, a private employer may deduct the absence from the exempt employees’ paid vacation or time off as long as they receive their full weekly salary.

If the business remains open, but the employees simply cannot get to work because of weather conditions, an employer may deduct an exempt employee’s salary for a full day’s absence. Under the FLSA, a deduction of a full day’s pay is allowed when an exempt employee is absent for personal reasons without jeopardizing the employee’s exempt status, but not for an absence of less than a full day.

Nonexempt Employees: Under the FLSA, employers generally are not required to pay nonexempt employees for any days they do not actually work. Thus, employers aren’t required to pay employees for days when the office is closed due to the weather.

But this doesn’t apply to nonexempt employees who are paid on a fluctuating workweek basis. These employees must be paid their full weekly salary for any week in which work is performed — even if they miss workdays due to a storm.