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A Message for Employers: COVID-19 & Workforce Challenges

Posted by Tonya Fletcher SPHR, SHRM-SCP on Mar 18, 2020 12:58:34 PM
Tonya Fletcher SPHR, SHRM-SCP
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In these challenging times, businesses are being impacted by the coronavirus. Employers are forced to make tough decisions or deal with those imposed upon them by governing bodies.

Here are situations that you, as an employer, may face:

Mandatory closure per government order

Some states are ordering the closure of businesses such as bars, gyms, and movie theaters, while others are limiting operations such as restaurants only being allowed to offer take out or delivery services. These measures help limit the spread of the coronavirus disease. Businesses are expected to close for a certain period or until further notice. States are expanding jobless benefits during this pandemic, which can help employees who cannot work.

Layoffs

In a layoff, employees are let go and not guaranteed return. The employee is no longer active, and employment is terminated.

When employees are being laid off, an employer should review applicable company policies, contracts, collective bargaining agreements and then compile selection criteria to determine which employee(s) will be part of the workforce reduction. The WARN Act may apply for employers of a certain size (additional details provided below).

After an employer has selected the employees to be laid off, they should review whether terminating these individuals would discriminate or excessively affect employees in a legally protected category (i.e., If all employees selected for the layoff were females over 40).

Furlough

A furlough is when an employee takes unpaid or partially paid time off of work for a period of a time. A furlough could be every Monday, or it could be for two weeks. Furloughing employees can be a valuable cost-saving measure for the employer during tough economic times or slow periods. It allows the employer to maintain the employee relationship, while the employee avoids unemployment. The expectation is for the employee to be called back to work. Benefits may continue because the employee is still classified as an active (non-terminated) employee, or COBRA may be applicable due to the reduction in hours. Advantages to a furlough include avoiding (or delaying) a layoff and reducing the need to re-hire. Read further into the next section for salaried exempt employee pay considerations.

Cut hours/cut pay

An employee's hours may be cut when a business is struggling, or operations need to be reduced. A full-time employee may have part-time hours for a time. For a non-exempt status employee, the employer only has to pay for hours when the employee actually works, and if there is no work, the employer can have the employee go home or not come in. Remember, the Fair Labor Standards Act (FLSA) requires that salaried exempt employees be paid a fixed weekly salary that cannot be reduced based on the quality or quantity of the employee's work.

Some employers look at cutting pay instead of or in addition to cutting hours. Under certain circumstances, an exempt employee's salary can be reduced, but in order to be defensible, it should be on a fixed basis (i.e., Not $1000 one week, $850 the next, and $800 the week after).

Employees may be more willing to accept these measures as an alternative to losing their jobs – or their coworkers losing their jobs.

Q&A

Q: Do I have to keep paying employees who are not working?

A: Employees who are not working are not typically entitled to the wages the FLSA requires. However, an exempt FLSA employee whose exempt status requires that they are paid on a salary basis must get at least $684 per week unless they do not perform any work during that workweek.

In this COVID-19 time, it is a consideration for employers to pay their employees who are not working to help maintain their employment. Employees may be entitled to paid leave benefits pursuant to state or local leave laws. Also, federal legislation is expected to be signed this week, which will provide businesses with compensation and tax credits for providing paid leave to employees.

Q: Does my employee get unemployment if they are not working?

A: In all of the situations noted above, an employee may apply for unemployment. Many states pay partial unemployment benefits to employees working reduced schedules. Each state operates its unemployment insurance program, and the federal government is allowing new options for states to amend their laws to provide unemployment insurance benefits related to COVID-19.

Many states require employees to file online for unemployment benefits, and some provide toll-free numbers for assistance. Employees who are receiving paid sick leave or paid family leave are generally not considered unemployed because they are still being paid. Employers may need to provide an unemployment notice in some states such as CA, CT, GA, IL, LA, MA, MI, NJ, NY, and TN.

Q: What happens to health coverage if employees are not working? What if they are unable to pay their share of premiums?

A: You need to check your group health plan information to determine how long employees who are not actively working can retain their coverage. Normally, group health plan coverage will cease when an employee terminates employment, or their share of premiums is not paid on time. However, the insurance carrier providing coverage may continue the coverage while a pandemic or other disaster is worked through, and the employer can reopen their business. An employer may be able to make an arrangement to pay the employee's share of premiums until they can reopen their doors. Each situation will be different depending on the insurance carrier. Depending on the employer's size, a COBRA notice must be sent when an employee's coverage terminates.

Q: Can I offer severance pay to employees who lose their jobs?

A: Yes, you can. Severance is a consideration. It is usually based on the length of employment for which an employee is eligible upon the termination of employment. Additionally, an employer can offer an outplacement provider to help exiting staff members land on their feet in a new position.

When an employer is considering laying off employees that are 40 or over, they should take into consideration having the employees sign a waiver of their ADEA (Age Discrimination in Employment Act) claims. Such waivers are governed by the Older Workers Benefits Protection Act (OWBPA) and must be drafted and executed according to that law. It is recommended to work with an attorney in drafting a severance agreement.

Q: Do I have to give employees notice if I am shutting down?

A: The federal WARN Act imposes a notice of obligation on covered employers who implement a "plant closing" or "mass layoff" in certain situations, even when they are forced to do so for economic reasons. Employers with 100 or more full-time employees must provide at least 60 calendar days of notice to employees, unions, and state/local government officials. Even though COVID-19 was an unforeseeable business circumstance, an employer should provide as much notice to affected employees as is practicable under the circumstances. Additionally, some states have their own WARN laws more stringent than federal WARN, such as CA, IL, MA, NJ, NY, TN, and WI.

Final Thoughts

It is important to have compassion and empathy for employees that are affected by business downturn. Continue to communicate during these difficult times. Follow federal, state, and local laws. It is recommended that you seek qualified legal counsel familiar with your particular circumstances before taking any action.

Federal, state, and local governments are working to assist employers affected by COVID-19. In Florida,

Governor Ron DeSantis announced the activation of the Business Damage Assessment survey, managed by the Florida Department of Economic Opportunity (DEO), to assess the impact of COVID-19 on Florida's local business operations. The results of the survey will be used to evaluate the impact the virus has had on the local economy, so appropriate actions to begin relief programs can take place.

The Business Damage Assessment Survey can be taken online at https://floridadisaster.biz/.

 

 

Tonya Fletcher SPHR, SHRM-SCP

Written by Tonya Fletcher SPHR, SHRM-SCP

Tonya is the Labor Compliance Manager at FrankCrum. In this role, she leads the FrankAdvice team and manages the delivery and content of best practice information to client owners and managers regarding all types of employment related topics. When she’s not at work, Tonya enjoys international travel.

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