In today’s post we will be discussing how your company’s payroll should be handled if you should find yourself in the midst of disaster. To refresh your memory on our discussion last week on accounting for loss and property damage, click here to visit last week’s blog post: http://bit.ly/2g7DZxQ.
Calculating Payroll
If your business closes or brings in additional employees during a disaster, carefully review federal law, your local laws and your employment agreements to determine whether you’re legally obligated to pay your employees.
Who Must Be Paid
Under the Fair Labor Standards Act (FLSA), you may be required to pay exempt, salaried employees during a temporary closing. In that circumstance, you may require your employees to use their paid leave time but may not refuse to pay them if they have no available leave time.
Under federal law, nonexempt employees are generally only paid according to the time they worked and are therefore not legally entitled to pay during a closing. However, your local laws or your employment agreement may require you to pay employees who were originally scheduled to work during your closing.
If you require employees to remain on-site during a disaster, you must pay them for all time during which they are not permitted to leave. This includes overtime pay if it otherwise applies.
Late Payments
If a disaster delays processing paychecks, you should make issuing them one of your first priorities. Willfully failing to pay your employees in a timely manner is a violation of the FLSA and may also violate state laws. While you might be excused from penalties during a power outage or when your office is inaccessible, you should not delay payroll to try to manage your post-disaster cash flow.
If a disaster-related situation should occur for your business, you can rely on our company to help assist you with any payroll problems you would face and provide you with peace of mind. If you would like to speak with us on processing payroll for your company you can contact us at (310) 534 – 5577.
This Friday, read our final blog post on this topic for information on reporting insurance proceeds and filing taxes.
This information was written by Dennis Najjar, co-founder of AccountingDepartment.com, and shared on CPAPracticeAdvisor.com.
