Summer Lay-Off

Q: I go on a two-week vacation every summer, during which time my staff either uses their own vacation time or, if they have none, are laid off. What considerations should I be aware of, such as unemployment insurance, the WARN act, etc.

A: As you may know, you are perfectly within your rights as a business to establish the practice’s working hours. The Fair Labor Standards Act, the primary act controlling payment of wages, only requires employers to pay for hours worked. If you decide to close the office you do not have to pay employees. If you provide vacation or paid time-off (PTO) to employees, they may take it during this time or take the time without pay. Remember, if you are providing paid time off, you can set the parameters for taking the time off. You can require employees take their vacation time at the same time you take it yours. If you do not want to make your employees take all of their vacation at the same time you do, you can make them take partial time, sample policy: one week of the vacation must be taken when the dentist take’s his/her vacation.

If you lay-off employees without pay for the two-week period of time, they do have the right to apply for unemployment compensation. In order to receive unemployment individuals must be both eligible and qualified. To be eligible, the employee must have worked full time, at least 32 hours per week, for a designated period of time. Qualification includes being out of work through no fault of their own and being able and available for full time work. Since you are closing the office, my opinion is that all eligible employees would also qualify for unemployment compensation.

Employees have the right to apply for unemployment, as a mater of fact, you are required to advise laid off employees of their right to apply and actually tell them the location of the closest unemployment office. Really! Once the employees apply, you will need to respond to the each request. This will involve some paperwork, including notification that the lay-off is only for a two-week period of time.

With regard to the WARN Act, Worker Adjustment and Retraining Notification Act, I truly doubt you will need to be concerned over compliance with this act. WARN requires employers with 100 or more employees to provide 60 days notification of a plant closing or mass lay-off. Since there are not many 100 employee dental practices, I don’t think WARN will be an issue.

When you lay-off employees you may need to consider how you handle any regular payroll deductions for items such as health care premiums. If you do not produce a paycheck, how will you take the deduction? You may want to get a secondary authorization for a special deduction on future paychecks to cover the missing deductions.

If you use an accrual system for earning vacation, sick, or paid time-off, the two week lay-off may have an impact on your employees overall time-off earned. You may want to adjust your accrual system to accommodate the two-week shut down and make sure they truly accrue what you have advised them they will accrue.

Be careful not to provide compensatory time, time-off with pay in lieu of overtime pay. Unless the compensatory time is taken within the same 14 day pay period that the overtime was worked, private employers can not offer it to their employees.

As the employer you have a great deal of latitude on how you handle your employees during your vacation. It is always important to consider both your needs as the business owner and the needs of your staff, and the administrative aspects of the policy. Your ultimate goal should be developing a policy that will help you efficiently run your practice while creating a positive work environment.

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