While parts of Northern California are still reeling from damaging wildfires there two months ago, multiple fires are currently threatening Santa Barbara/Ventura, Los Angeles and Northern San Diego Counties. Fueled by high winds, the Southern California blazes are far from being contained. Without a doubt, safety and security are the highest priorities at present as this dangerous situation unfolds.

Once the fires are extinguished, however, California employers will be wondering what happens next. This article summarizes some of the key labor and employment issues that may arise in the near term for businesses affected by these fires.

Volunteer Emergency Responder Leave

Many states, including California, protect employees who serve as volunteer emergency responders and are called into action during natural disasters. California employers may not discharge or otherwise discriminate against employees who take a temporary leave of absence to respond to an emergency in their roles as volunteer firefighters, emergency rescue personnel, or reserve peace officers.¹ This leave may be unpaid.

The law does not require advance notice, except for certain health care workers. Employees who are health care providers must inform their employers both when they become designated as emergency rescue personnel and when they are notified of their duty in an emergency.

When faced with employee requests to take time off to assist with relief and rescue efforts, employers should take care to confirm whether the requested relief is related to volunteer first responder duties in order to appropriately determine employees’ leave and reinstatement rights.

Other Leaves of Absence & Related Issues

Employers should bear in mind that employees may be entitled to use leave time to deal with the ramifications of the fires. Eligible employees who have suffered a serious injury or illness—or who have a family member who did—may be entitled to leave under the federal Family and Medical Leave Act or the California Family Rights Act.²

Depending on the circumstances, some affected employees might qualify for paid sick leave under state or local law. Under the California Healthy Workplaces, Healthy Families Act, for example, leave may be used for preventative care as well as for the diagnosis, care, or treatment of an existing health condition of the employee or his or her family member.³ The City of Los Angeles also has a paid sick time ordinance, which could apply to certain workers.

Under the state’s school activities leave law, California employees with 25 or more employees at the same location may also see requests for time off from workers with minor children. The Labor Code provides parents with up to 40 hours of unpaid leave time per calendar year for various school-related issues, including if a school or licensed child care facility closes due to a natural disaster, including earthquake or fire.⁴

Even if not covered by federal, state, or local laws providing for time off, an employee may qualify for sick or other leave under a company policy or collective bargaining agreement. As such, it is important to remind front-line managers and supervisors of governing policies on this subject and their possible application during this time period.

Employers might also choose to show additional flexibility in granting leave time in light of these extenuating circumstances. Any changes to leave policies should be deliberate, communicated to all staff and management, and applied fairly and consistently to all affected personnel.

Wage & Hour Issues

There are several payroll-related concerns that can be triggered by an emergency situation. Employers may face questions concerning who must get paid when operations are temporarily shuttered, whether remote work is compensable, and how to handle delayed wage payments.⁵

• Calculating Wages of Non-Exempt Employees

Under the Fair Labor Standards Act (FLSA), non-exempt workers must be paid only for the time they work.⁶ As a result, employers need not compensate non-exempt employees who are not working because of the scope or impact of fires. Notably, it does not matter whether the absence is based on the employer’s decision to close a worksite or the employee’s decision to stay home (or evacuate). If the worksite is open, but the employee decides to stay home, the non-exempt employee does not need to be paid for the hours missed.

Employers must be aware, however, that there may be exceptions for on-call time. The FLSA considers employees to be “on call” if they must remain on the employer’s premises or are unable to use their time for their own purposes.⁷ Thus, for example, employees who are required to remain at a location that has lost power in case power returns should be paid for the time spent holding down the fort despite their inactivity. California law similarly obligates employers to compensate employees who are subject to the control of the employer, even if the employees are not required to remain on the employer’s premises.⁸ This is especially true where an employee’s on-call waiting time is spent primarily for the benefit of the employer.⁹

California wage and hour law further requires employers to pay employees for other types of activities, such as reporting time. Employees who report to work on a scheduled work day, but who are not utilized or are given less than half of their usual or scheduled day’s work, must be paid for half of that usual or scheduled day’s work at their regular rate of pay. That being said, reporting time pay requirements do not apply in some emergency situations. Reporting time pay is not warranted, for example, if: (1) civil authorities recommend closure of the workplace; or (2) the disruption is caused by an act of God or is otherwise outside the employer’s control. As a result, employers electing to close early because of the fires should be careful to articulate their reasoning to employees.

Employers should also bear in mind that split shift premiums may apply if workers are asked to work such shifts during this uncertain time. A California employee working a split shift must be paid an amount that is at least equal to the minimum wage for the hours worked in a day, plus one hour. Whether an employee is entitled to a split shift premium depends on the number of hours worked and the employee’s regular rate of pay.¹⁰

• Calculating Wages of Exempt Employees

When an employer shuts down its operations because of adverse weather or other calamity for less than a full workweek, exempt employees must be paid their full salary, assuming they work any time at all during the week.¹¹ This rule also applies if exempt employees work only part of a day. Thus, if an employer decides to send staff home early due to deteriorating conditions, it may not dock exempt employees’ pay. Indeed, if an employer deducts from the employee’s salary in this situation, it risks losing the overtime exemption applicable to that employee.

Nonetheless, and barring any overly restrictive company policy to the contrary, exempt employees may be required to use accrued leave or vacation time (in full or partial days) for their absences. While it might not be a popular move, an employer can direct exempt employees to take accrued vacation time or paid time off that does not include state-mandated paid sick leave for the closure, pursuant to the employer’s bona fide leave or vacation policy. If, on the other hand, an employee does not earn or does not have any available leave time, the employee is entitled to his or her full guaranteed salary if the employer decides to close due to a catastrophic event like the wildfires.¹²

On the other hand, if an employer is open for business, an exempt employee who elects to stay home and does not perform any work is considered absent for personal reasons. In lieu of paying salary, an employer with a bona fide leave or vacation policy may require the employee to use his or her accrued vacation time or paid time off that does not include state-mandated paid sick leave to cover the absence. As long as it is permitted by the employer’s policies and does not conflict with California’s paid sick leave rules, leave time in this circumstance may be taken in full or partial days.

If an employer has a leave policy, but the absent employee does not have a leave account balance, the employer is not obligated to pay the employee. The employer can place the employee on unpaid leave for the full day(s) that he or she failed to report to work for personal reasons. Employers should bear in mind that salary deductions for less than a full day’s absence are not permitted, even though leave balance deductions are allowed for partial-day absences. As a result, if an exempt employee with no leave balance misses half a day, the employer must pay that employee his or her salary for the entire day, with no partial deduction for the half-day absence. Meanwhile, an employee with a leave balance in the same scenario could be required to use half a day of accrued vacation time or paid time off that does not include paid sick leave time to cover the absence.

• Remote Work

The ongoing fires in Southern California have resulted in road closures, reduced visibility due to smoke, and degraded air quality. Given these conditions, employers should consider how to address situations where employees may perform work from home—whether as a short-term or long-term solution. As noted earlier, non-exempt employees must be compensated for all time spent working. Accordingly, employers must pay non-exempt employees for performing any work remotely, even if the employee did not have express permission to work from home. Employers, moreover, may need to rely on employee self-reporting of hours worked in such a scenario. To help minimize the risk of wage and hour violations for employees who are working from home, employers should implement, communicate, and strictly enforce a time and attendance policy that clearly explains what constitutes compensable time and requires employees to accurately record all time worked. 

Exempt employees, too, must be paid their regular salary in this circumstance. Even if an exempt employee spends only a few minutes working remotely, he or she must be paid the usual salary for the day and the workweek. As discussed above, in instances where a partial day is worked, the exempt employee may be directed to use appropriate leave time for the balance of the time.

• Potential Delays in Wage Payment

One possible consequence of a natural disaster is the delayed processing of employees’ wage payments. California’s general rule requires payment of wages at least twice during each calendar month, with labor performed between the 1st and 15th paid between the 16th and the 26th day, and labor performed between the 16th and the last day paid between the 1st and 10th day of the following month. Alternatively, employees may pay be paid weekly, biweekly, or semimonthly if the wages are paid not more than seven calendar days following the close of the payroll period.¹³ Additionally, wages earned for labor in excess of the normal work period (e.g., unscheduled overtime) must be paid no later than the payday for the next regular payroll period.¹⁴ In the event that an employer needs to change the payday schedule, California law requires employers to give written notice to employees, within seven calendar days of the change.¹⁵

In the immediate wake of the fires, employers may be unable to process or fund payments in accordance with their designated paydays. Employers that anticipate a late processing of payroll should notify employees of any wage payment processing problems and advise them of when they can expect payment. Notice should be made in writing, as soon as practicable, and is warranted particularly where employees are on direct deposit and might otherwise write checks against anticipated deposits. Indeed, open and ongoing communication with employees about wages, scheduling, and related matters is highly recommended throughout the recovery period.

Although some laxity may be afforded to those who experience significant difficulty meeting these types of obligations as a result of this unfolding disaster, California has not yet indicated if there may be any relief or waiver of the normal wage payment laws. (At least two of the Labor Commissioner’s district offices currently are closed themselves due to the surrounding fires.)

Relatedly, if payroll is processed in California for employees working in other states, it is important to be mindful of those state laws and potential penalties or criminal fines for delayed payment. For example, if the timely payment of wages to employees in New York is compromised, an employer may be subject to monetary penalties under that state’s labor law. All in all, employers that cannot meet payroll obligations must simply do their best—notify employees as stated above, keep records of the reasons for the delay, and make arrangements to pay employees as promptly as possible.

Unemployment Benefits

Employees who are displaced from their positions due to the fires may be eligible for unemployment compensation from the California Employment Development Department (EDD).¹⁶ State unemployment benefits typically run for up to 26 weeks. The government sometimes has the authority, however, to extend those time limits.

Governor Brown has issued State of Emergency proclamations for Ventura and Los Angeles Counties due to the effects of the wildfires. As a result, the one-week waiting period for unemployment benefits is waived, and employers have a 60-day extension to file state payroll reports and make payroll taxes contributions.¹⁷

To date, President Trump has not declared a federal state of emergency with respect to the Southern California fires. If he elects to do so (as he did with the Northern California fires in October), unemployment benefits could be offered to workers who lose their jobs because of the fires but do not qualify for state benefits, such as self-employed individuals. If a federal state of emergency is declared, benefits through the Disaster Unemployment Assistance (DUA) would be available for individuals who live or work in counties made the subject of a disaster declaration. Employees would first be required to file for regular unemployment compensation benefits before filing for DUA, and if the employee is ineligible for standard state unemployment compensation, the employee then may receive DUA.

Employers may want to consider letting employees know about eligibility for these programs if the employer cannot provide work for employees as a result of the fires.

WARN or Other Mass Layoff Notification

Employers that decide to close a facility or implement a mass layoff due to this natural disaster must evaluate whether notice will be required under the federal Worker Adjustment and Retraining Notification Act (WARN) or its California equivalent.

• Federal WARN Notices

Briefly, the WARN Act requires a covered employer (100 or more employees) to give 60 days’ notice prior to a plant closing or mass layoff. A plant closing occurs when a facility is permanently or temporarily closed and 50 or more full-time employees suffer a job loss. A mass layoff occurs when either of the following suffers a job loss: (a) 500 or more full-time employees at a facility; or (b) 50 or more full-time employees at a facility constituting at least 33% of the workforce.¹⁸ A job loss includes a layoff of six months or more. When required, WARN notice must be provided to affected nonunion employees, the representatives of affected unionized employees, the state’s dislocated worker unit, and the local government where the closing or layoff is to occur.¹⁹

While WARN provides some leeway in the case of a natural catastrophe, the exception is quite limited. Employers may give shortened (or retroactive) notice if the disaster was a direct cause of the job losses, and may be able to rely on the “unforeseeable business circumstances” exception if the disaster was an indirect cause. Nonetheless, employers are not relieved completely of their WARN notice obligations. They must give “as much notice as is practicable” (even if that is retroactive notice), and they must state why they were unable to give notice earlier.²⁰

• Cal-WARN Notices

California has enacted its own “mini-WARN” law, which is known as Cal-WARN and is broader than the federal version.²¹

Under Cal-WARN, a covered establishment is any commercial or industrial facility that employs 75 or more employees. Notice is triggered upon: (1) a mass layoff (a separation of 50 or more employees during a 30-day period); (2) a relocation (the removal of all or substantially all of the employer’s operations to another location at least 100 miles away); or (3) a termination (the entire or substantial cessation of the employer’s operations).

When required, employers must provide written notice to affected employees, the EDD, the local workforce investment board, and the chief elected official of each city and county government where the triggering event is occurring. This notice must be provided 60 days in advance of the layoff, relocation, or termination event.

There are exceptions to the Cal-WARN notice requirement, including where the event is caused by a physical calamity. But as a practical matter, out of an abundance of caution, and consistent with federal WARN, notice should be given as soon as possible if the fires will cause a triggering event.

Additional Considerations

In addition to the topics highlighted herein, employers may need to consider issues related to employee assistance programs, property and casualty claims, workers’ compensation inquiries, and benefits continuation options. Employers may also choose to explore different ways of assisting their affected employees, such as establishing leave sharing programs that allow employees to provide unused vacation or PTO to affected employees on a tax exempt basis (with certain restrictions).²² Employers can also provide tax exempt payments under IRC section 139 for living expenses under certain conditions. California employers might also need to handle employee requests for loans and hardship distributions from employer-sponsored retirement plans, if the funds are needed to rebuild or to assist a close relative or dependent impacted by these fires.

For now, we hope our clients and friends stay safe, and we are ready to help employers tackle this complex situation as it unfolds.