I read an interesting post by Sara Zorich of Amundsen Davis concerning the year-end wage hour issues that employers must deal with, and I agree with the concepts set forth in that article.  There are a number of implications for these year-end issues which may inadvertently expose employers to liability if they do not take heed.

As the post notes, there is a concern with the giving of bonuses to non-exempt workers.  Unless this is a true Christmas bonus or a bonus given in a totally discretionary (i.e., subjective) manner, that bonus must be included in the regular rate of employees if they work overtime.  If the bonus is part of an incentive program or a production bonus or promised in any way to workers, it is includible.  If it is a year-end bonus, then it must be allocated over fifty-two weeks, an equal portion thrown into each week and then overtime must be calculated or re-calculated.

If the employer closes its facility during the holidays, the issue of payment (or not) for workers arises.  As a general rule, non-exempt employees are paid only for hours worked and in case of a holiday closure, they need not be paid.  For example, if the employer closes New Years Day, a holiday, no pay is required.  The same hold true for inclement weather closures.  Under that scenario, if the facility opens and then closes early due to weather, the employees need only be paid for actual working hours (not counting use of PTO or sick hours to account for the full day or days).

With exempt employees, the employer must also be careful.  If these employees do any work during a week, they are entitled to their full salary.  Thus, unless exempt employees are either forbidden from doing any work during a holiday closure (whether such work is remote or at the facility) or the employee(s) are on PTO, the employer may have to pay that salary if productive work is performed.  This a tricky situation and presents a melding of legal and operational concerns.  As a corollary, as the article notes, if there are inclement weather closures and the weather closure is for less than a week, the salary is also due.

The Takeaway

Employers must also examine relevant state laws as they may impose greater burdens on businesses.  Also, it is important to review Company Handbooks and other employer compensation policies, as those may grant greater rights to employees than state/federal laws may otherwise mandate, such as shift differentials or increased payment (e.g., double time) for holiday work.  Better to be proactive than being forced to respond to a demand for wages or a lawsuit.

Happy New Year!