As an employer, am I required to pay my employees wages if a natural disaster temporarily disrupts my business? Do I still have to pay wages if my business is flooded and employees can’t work?

The lawyer answer is, of course, “It depends.” Whether you are required to pay employees during a temporary closure due to natural disaster varies based on whether your employees are exempt or non-exempt.

The Federal Labor Standards Act (FLSA) is a federal law governing wages and hours of work. For employees covered by FLSA, it requires employers to pay non-exempt employees no less than the federal minimum wage for each hour actually worked, and overtime at one and one-half times an employee’s regular rate of pay for hours worked in excess of 40 per week. FLSA requirements are not waived during a natural disaster.

The key to FLSA is the phrase “hours actually worked.” If you are unable to provide work to employees, you are not required to pay non-exempt employees for the hours they would have otherwise worked.

Exempt employees are treated slightly differently. The FLSA implies that exempt employees should be paid even if there is a temporary closure. If an exempt employee is ready, willing, and able to work, you can’t make deductions from their pay, even if work is not available.

In California, the Division of Labor Standards Enforcement (DLSE) doesn’t distinguish between exempt and non-exempt in its Interpretations Manual. However, while the DLSE created the manual to assist with interpreting law, it is not itself a law. Since it’s not completely clear, I recommend following the federal law.

If you have a labor contract with your employees or labor union, check your contract to see if you are required to pay employees during natural disasters or other temporary closures.

Now here’s an interesting twist — what if your business floods and the water destroys your business records? How will you calculate your employees’ wages?

The law requires that employers pay at least the full minimum wage and overtime compensation due for covered employees for hours that the employee worked. You may have to allow your employee to recreate their timesheet and pay accordingly.

Electronic record-keeping and a good backup system for financial and tax records may help mitigate risks that arise during a disaster. We recommend that businesses create backup copies of electronic files, store them in a safe place, and include a cloud-based system as part of that strategy. Remember, keeping copies of your business records at home won’t help if both your home and business are inaccessible.

Mary Luros is a business law attorney with Hudson & Luros, LLP, in Napa, and can be reached atmary@hudsonluros.com or 418-5118. The information provided here is not intended as legal advice, nor does it form an attorney-client relationship with the author. The author makes no representations as to the reliability or accuracy of the above information. In a perfect world we wouldn’t need disclaimers — or attorneys.

I own a restaurant and I’m not sure what to do with the tips that my servers receive. Do I need to keep track of their tips? If a customer uses a credit card, can I subtract the credit card processing fee from the tip? What about tip pooling?

Money that customers pay, give or leave for an employee, over the amount actually owed for the goods or service, is considered a tip (or gratuity) and it is the sole property of the employee to whom it was given.

In California, owners and managers are prohibited from sharing in or keeping any portion of gratuity that customers give to employees. You may not make wage deductions from gratuities, or use gratuities as a credit against wages, since tips are voluntarily left by the customer and never belong to the employer. Employees must be paid the minimum wage, on top of any tips they may receive.

A service charge, unlike a tip, is an amount that an establishment charges customers as part of the service contract. Interestingly, employers need not share any portion of the service charge with employees.

Employers who fail to keep accurate records of all gratuities can be charged with a misdemeanor, punishable by a fine not exceeding $1,000, or by imprisonment for not longer than 60 days, or both.

If you run a large food or beverage establishment, use IRS Form 8027 (Employer’s Annual Information Return of Tip Income and Allocated Tips) to file an annual return of receipts for food or beverage operations and tips reported by employees.

When a customer uses a credit card to pay their bill and adds a tip, you are required to pay your employee the tip in full, no later than the next regular payday following the transaction. You may not deduct credit card processing fees or costs from a tip.

You may require your employees to share tips (tip pooling) with other staff that provide service, as long as you don’t keep any tips yourself. In a restaurant, this would include employees who provide direct table service, such as waiters and waitresses, busboys, bartenders and hosts or hostesses. Owners, managers and supervisors may not receive compensation from the tip pool.

Violation of any of these rules could end with a wage claim before the Department of Labor Standards Enforcement (DLSE), a civil lawsuit for unpaid wages, or both. The DLSE treats underpayment and nonpayment the same and regularly seeks waiting time penalties and liquidated damages in both situations.

Mary Luros is a business law attorney with Hudson & Luros, LLP, in Napa, and can be reached atmary@hudsonluros.com or 418-5118. The information provided here is not intended as legal advice, nor does it form an attorney-client relationship with the author. The author makes no representations as to the reliability or accuracy of the above information. In a perfect world we wouldn’t need disclaimers — or attorneys.