Insurance and natural disasters: Protecting clients and their businesses

Previously, a “catastrophic season” may have indicated a certain period over the course of the year, but over the past few years, it’s become clear that severe weather and natural disasters can occur regardless of time and place. Insurers and policyholders no longer have to just worry about “hurricane season” in the Gulf and the Mid- and South Atlantic states or ice storms and snow squalls in the north. It’s now important to be prepared for a variety of major storms, fires, blizzards, and other various types of weather.

Inclement weather and natural disasters will happen; there’s no way for any organization to prevent them. That said, organizations should have emergency preparedness plans in place —  ones that can easily be implemented when Mother Nature rears her ugly head. Insurers can help encourage organizations to create these plans in an effort to protect their physical businesses, their employees and (hopefully) return to work as quickly as possible.

Here are five important items organizations should consider.

1. Have an evacuation plan in place to ensure that employees can get to a safe location
2. Have emergency supply kits that are easily accessible and up-to-date
3. Communicate and practice evacuation plans with employees on a regular basis
4. Store important business records and documents in a secure digital location
5. Create a communication plan, so employees know how to contact the employer

Again, these plans won’t prevent natural disasters from occurring, but organizations with an emergency preparedness plan will be better positioned to handle these events.

Following major storms, fires, blizzards, and other types of inclement weather, organizations will likely have a variety of questions related to their workplace and their employees. And, like anything, preparing guidance in response to these questions is vital.

What obligations does an organization have to communicate with employees following a natural disaster?

In general, organizations should communicate with their employees as often as necessary. This is especially important following a natural disaster. Organizations should take steps to communicate with each and every employee to ensure that each employee is safe and accounted for. Organizations have a responsibility to provide their employees with a place of employment that’s free from recognized hazards, including those related to and resulting from winter weather, hurricanes, wildfires, etc.

Can an employee refuse to work if they believe the workplace is not safe?

Needless to say, organizations should use common sense and not compromise their or other’s safety in reporting to or remaining at work if it is unsafe to do so. While ordinarily employees should be discouraged from abandoning their jobs without first communicating with the organization about any legitimate safety concerns, in situations that present an imminent threat to one’s health or life, employees should be empowered to exercise good judgment to protect and preserve their own health and safety and that of others in the workplace, as well. The U.S. Occupational Safety & Health Administration (OSHA) further explains that employees do have the right to refuse to do a job that they believe in good faith exposes them to imminent danger. Organizations should keep OSHA recommendations in mind and always keep the safety of their employees as the top priority.

What about paying employees? Should they be paid when the company has shut down a worksite due to inclement weather?

Well, the age-old answer is: it depends. But, really, it does. An employee’s classification as exempt or non-exempt comes into play here.

If employees are non-exempt, they only need to be paid for the hours that they spend working (assuming no contract or collective bargaining agreement requires they be paid otherwise). So, even if non-exempt employees may be otherwise ready, willing and able to come to work, if they cannot work because the organization does not make work available, there is no obligation to pay them for this time. The same is true for non-exempt employees who may want to report for work but are unable to safely do so. If they do not work, they are not entitled to be paid. Given that many employees have been, and will likely continue to work remotely, it’s worth mentioning that those employees who do so should be paid for that time.

If employees are exempt from minimum wage and overtime requirements, they are entitled to their full weekly salary for any week in which any work is performed.  An organization cannot withhold or deduct pay from an exempt employee’s weekly salary for organization-mandated closures of less than one week. However, such employees need not be paid for any full workweeks in which they perform no work at all, even if this is due to a business closure. (Again, absent a contract or collective bargaining agreement indicating otherwise).

What if an organization doesn’t know when they’ll be back up and running? If employees are “on-call,” should they be paid while they’re waiting to be called back to work? 

Generally, if non-exempt employees are required to remain on or near company premises, or otherwise are not free to use the waiting time for their own purposes and can be considered to be “engaged to wait” for the organization’s call to action, then the time spent waiting is compensable time.  If the employees are free to engage in their own pursuits until such time as the organization contacts them, then they are fairly said to be “waiting to be engaged,” which is not considered payable time.  Exempt employees need to be paid for any week in which they perform any work, and conversely, they need not be paid for any week in which no work is performed. These compensation obligations assume no contract or policy requires continuation of salary or wages otherwise.

Remember, inclement weather and natural disasters will happen. There’s no way for any insurer or organization to prevent them. However, organizations that have emergency preparedness plans in place and understand their obligations following severe weather will be better prepared to weather both the physical and metaphorical storm.

Doug Dvorak, Esq., is the vice president of product innovation at Enquiron, a provider of consultative business solutions to employers in all 50 states. Doug is responsible for new product ideation, development, and market strategies and has over 20 years of insurance industry-specific experience, primarily as an attorney.

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• Rebuilding in the wake of a disaster
• Claims lessons & implications from 2020′s wildfire season
• 2020 natural catastrophes triggered $268B in economic losses globally