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Human Resource Solutions for a Changing World

March 13, 2020

In the last 24 hours, on the heels of COVID-19 being declared a global pandemic, employers have watched dramatic developments unfold that will

likely impact their business and human resources for

the coming weeks and, perhaps, months.

To assist our clients during this unprecedented event, this e-bulletin provides critical, practical HR guidance for managing potential labor adjustments and

special employee leaves of absence during a pandemic.

NOTE: If you did not receive our March 3, 2020 e-bulletin with questions and answers to the

most common coronavirus HR concerns, click HERE to request a copy. The e-bulletin

contains information that is essential to share with your management team.

Due to the continued spread of coronavirus, federal, state, and local governments are imposing severe, proactive social distancing and crowd control measures as a strategy to ensure significant numbers of people do not contract the virus at once and tax our medical system beyond its capacity. As a result, with little-to-no notice , schools are closing, events are being cancelled, and employees are lining up to request leaves of absence, remote work, and accommodations. 

Most employers are likely to face one or more employees requesting time off for a coronavirus-related reason, such as:

— A medical condition that raises risk if coronavirus is contracted.

— A quarantine or recommended period of voluntary self-isolation imposed by the CDC or state or local health authority.

— A need to care for a child whose school, nursery, or day care closed.

— A need to care for an older family member who has been relocated to the employee’s home as a precautionary measure or whose usual caregiver is unavailable.

— The employee’s own illness or the illness of an immediate family member from a positive confirmed coronavirus diagnosis.

Most companies do not have multiple leaves of absence to account for all the circumstances that can arise during a global pandemic. Existing leave policies may serve as a baseline for determining select provisions for time off, but exceptions will be necessary, leaving employers to question how best to handle the unique requests they will receive.

To help clients effectively address the multiple leave scenarios that arise during a pandemic, we have created a comprehensive chart that outlines a variety of pandemic-related non-traditional leaves of absence. Click HERE to access this chart, which includes recommended provisions for each type of leave, including, among others, required documentation, compensation and benefits during the leave, the amount of leave time, and return-to-work requirements.

As you review the recommended leave provisions that we have outlined, remember, uncommon situations call for an uncommon response . Keep this in mind as you consider unique requests from employees during this pandemic.

Unfortunately, another potential impact of the coronavirus pandemic may be a need to cut labor costs due to decreased revenue, work suspensions, and uncertain economic conditions. If your business is in this situation, here are some labor-related cost-reduction options to consider:

— Implement a hiring freeze.

— Delay planned start dates for new hires.

— Reduce or eliminate overtime.

— Do not fill vacancies as they arise.    

— Implement reduced workweek schedules on a rotating basis or by department or position.

— Delay merit or annual cost-of-living wage increases.

— Suspend select benefits.

— Suspend company-matching contributions to 401(k) plans, if permitted under the plan.

— Freeze or cancel bonus programs or delay payment of bonuses*.

— Discontinue temporary worker arrangements and eliminate temporary positions.

— Offer the option for voluntary unpaid time off.

— Implement a temporary wage decrease.

Any labor-related changes should be based on business necessity and must be nondiscriminatory and compliant with applicable state and federal employment regulations. For example:

— If you reduce the rate of pay for an employee who is classified as exempt under one of the White Collar overtime exemptions, in keeping with the Fair Labor Standards Act (FLSA), you must ensure the employee is paid a minimum guaranteed salary of $35,568, annualized. Also, depending on the circumstances, you may be obligated to pay the full weekly salary if you initiate a reduction of work hours for a salaried exempt employee. 

— If you reduce hours for some employees but not others in the same position, be sure to have a job-related reason for your selection of affected employees. 

— If you reduce pay for different groups of employees (e.g., exempt vs. nonexempt or employees working in certain divisions or departments impacted to a greater degree by the pandemic), use a consistent formula to determine the amount of the reduction, such as a 5% reduction of the base hourly or salary rate for all employees affected.

While legal liability is one important consideration, morale is another, especially during times of uncertainty . To avoid immediate and significant morale problems, include your salaried (not just hourly) employees in any cost-cutting measures that affect pay or benefits. In fact, to send a strong message that the “last shall be first” and/or to foster loyalty during tough times, some companies implement changes like these at the top leadership level first, before including front-line workers.

* In some states, employers are obligated to pay “earned” bonuses. If you are a client of our firm,

before canceling or delaying payment of a bonus, contact us to discuss any unique state regulations.

More likely than not, you will face a request from an employee to work from home temporarily due to the pandemic. Or, you may find that it’s best for the business to require some employees to work from home during this period. Employers can proactively designate and require employees to work remotely or they can address employee requests as they arise.

To prepare for these circumstances, if you haven’t done so already, as soon as possible, determine which positions (not people) are s uitable for remote work based on the nature of the duties. Once you identify these positions, determine what equipment and work-related needs are necessary for an employee to work remotely, such as laptops, a secure internet connection, software, a land line, etc. After you make these decisions, you’ll be in a better position to address any employee requests for remote work or to determine which employees should be asked to work remotely.

If you have multiple employees in the same position and you determine that some, but not all, can work remotely, ensure you have a job-related, nondiscriminatory reason for selecting who will work remotely, such as certain skills or length of service. If you base the decision on performance or productivity , ensure you have documentation to support your decision and meet the burden of proof, should this be necessary.

Prior to permitting an employee to temporarily work remotely during a pandemic, if time permits (given the significant business and HR challenges that exist during pandemic), establish basic remote-work guidelines and provisions , such as requirements to work certain hours (if necessary), attend company meetings remotely, maintain a record of all hours worked, and maintain the confidentiality of company documents and information the employee will take home or access from home. Employees permitted to work remotely on a temporary basis during a pandemic should also be notified that the arrangement can end at any time for any reason at the discretion of the company.

As part of your guidelines, remote work employees should not be permitted to host work-related, in-person meetings at their home , unless extenuating circumstances exist and more than two employees are present together. Also, in most cases, employees who work remotely should not be permitted to undertake the care of a minor child or dependent adult while working. (Some limited exceptions for employees in certain positions may be necessary during a pandemic.)

If, due to the pandemic, you are unable to furnish work to some employees or you must temporarily close the business or select department/divisions, it may be necessary to implement a furlough (an employer-imposed unpaid leave due to a temporary lack of work) or a layoff (separation of employment). Should this become necessary, selection of positions and employees for the furlough or layoff must be nondiscriminatory, job-related, and consistent with business necessity .

Examples of factors to consider when selecting employees for a furlough or layoff that does not involve temporarily closing an entire department, branch, or operation include, but are not limited to, length of service; the loss or retention of certain jobs or projects; a need for a given position/person based on current projects or work load; a need to retain employees with select skills, certifications, or licenses; and employee performance or productivity (should be documented).

Employers facing the need for a furlough or layoff should consider the following:*

— When selecting employees for a furlough or layoff that does not involve temporarily closing an entire department, branch, or operation, avoid inconsistent selection rationales among employees or between departments. For example, if you use performance as the criteria in one department and length of service as the criteria in another department, you should be able to establish a business-related reason for the difference. In general, the more consistent you are, the fewer questions your decision will raise.

— Although most employees will understand the overall need for a company to implement a layoff or furlough during a pandemic, if some employees are retained and others are laid off or furloughed, you should be prepared to answer the “why me?” question. This is especially important when you retain people in the same position and department as the employee selected for furlough or layoff. Again, if your rationale is job-related and nondiscriminatory, you should be able to answer this question.  

— Employees who are temporarily furloughed for a period of time , such as 2-4 weeks, will likely qualify for unemployment benefits or special government initiated, pandemic-related wage replacement benefits. 

— Permit employees who are laid off or furloughed to use any available paid time off, even if this is not a standard practice.

— If you furlough an employee who holds a salaried exempt position for a portion of the official workweek and they work the other portion, you must pay the full guaranteed salary for the week. You can reduce a bank of paid leave time for the days not worked; however, this is not recommended during a pandemic. There is no requirement to pay the predetermined salary if the employee performs no work for an entire workweek .

— If an employee holding a salaried exempt position volunteers to take time off due to insufficient work and for personal reasons, salary deductions may be made for one or more full days of missed work. In this case, the employee's decision must be completely voluntary.

— Depending on the length of time for the furlough, you may decide to maintain employees’ benefits during the time off. If you elect to do so, determine (and document) if the employee will be responsible for paying his or her portion of any insurance premiums while on furlough and the precise period of time for the benefit arrangement.    

Clients who must lay off employees during the pandemic can call our firm to discuss severance pay and benefits , the use of a separation agreement with a general release and waiver of claims, and unique situations, such as the existence of a collective bargaining agreement , individual employment contracts , or a disproportionate percentage of employees selected for layoff who fall into one or more protected classes.

* Public sector employers may be subject to different regulations involving furloughs.

As a client of our firm, if you have questions about HR practices or solutions, state or federal employment regulations, or any other HR need, call or email our office for assistance.

Seawright & Associates

(407) 645-2433

[email protected]

seawright.com

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The information in this bulletin and in any attachments is for general purposes only. Please speak with a Seawright & Associates consultant about your specific needs before taking any action. Seawright & Associates does not engage in the practice of law. Information in this bulletin is not intended to be legal advice. Should you wish to have a legal opinion, we recommend that you speak with a qualified attorney.