Do Employees Get Paid if a Business Closes Temporarily?

When a business temporarily closes, hourly employees are paid for hours worked and reporting time pay, but salaried workers get a full week’s pay for any partial week worked. Under FLSA rules, salaried exempt employees receive their full weekly salary basis for any part of the week worked, but nonexempt employees can file for unemployment benefits during a temporary closure or business shutdown. Employers may offer paid leave for exempt workers or require them to use PTO substitution for temporary closures. Workers can file a wage claim for violations of WARN notice or state wage laws.

Paying Workers During Business Closures: Exempt vs. Non-Exempt Employees

Rules vary depending on whether an employee is non-exempt or exempt under wage and hour laws.

Non-Exempt Employees

A business has no obligation to pay non-exempt employees for hours they didn’t actually work.

So, if a hurricane forces a small business to shut down for a week, that business does not have to compensate its non-exempt employees.

By the same token, a business must compensate its non-exempt employees for any work hours they performed during the closure. Furthermore, employees may still be entitled to unemployment benefits during business closures, as during the COVID-19 pandemic.

If the employer is closed due to weather emergencies, then they must pay the exempt employees their full salary, as deductions can’t be taken for time off when work is not available.

Exempt Employees

When it comes to exempt employees, a business’s compensation obligations during a closure depend on whether the exempt employee puts in any work during the closure:

• If an exempt employee performs any work during a temporary closure, they are entitled to their usual compensation for that pay period;
• If an exempt employee doesn’t perform any work during the business closure, they are not entitled to their usual pay for that workweek.

Employers may also require exempt employees to use paid time off (PTO) during a temporary closure for weather events.

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Differing Views on Fairness in Compensation During Closures

Allan Weitzman, former head of the labor and employment practice for Proskauer Rose in Boca Raton and founder of Weitzman Mediation & Arbitration Services, believes not paying exempt employees during a closure is appropriate.

He says that when a business closes for a natural disaster, income doesn’t come in, customers aren’t called, manufacturing stops, and the company makes no money. “Without additional information, paying those employees may put the business in further debt,” he says.

Jill Schwartz, founder and managing partner of Jill S. Schwartz and Associates in Winter Park, sees it differently. “If the employer is closed due to weather emergencies, then they must pay the exempt employees their full salary, as deductions can’t be taken for time off when work is not available.”

Find an Experienced Wage Law Attorney

If you’re facing a dispute with your employer over unpaid wages, consider calling a wage and hour attorney with experience in federal and state law.