COVID-19: What to Do With Employees?

Developing a Small Business COVID-19 Action Plan

A current theme of questions being asked by small business during the Virus Crisis are: How can I stay afloat if I need to shut down my business for an extended period of time?  How long can I afford to retain my employees if sales continue to plummet?  How can my employees afford a quality of life if I can’t pay them?

Small businesses are being put in a very uncomfortable position, being forced to decide what is more important, their business, their personal well-being or the well-being of their employees.  This article is not meant to be a compliance update, rather is meant to serve as a guide to help give entrepreneurs information and questions to ask themselves so they can make the best decision for their organization.

Key Takeaways

• Be as Pro-active as possible! It is much less expensive to pay for legal and other advice now than pay to put out a fire later.
• Think long term and make sure to communicate your decisions and the rationale behind them with employees. Employees won’t remember what you say or do, they will remember how you made them feel.
• Document, Document, Document
• Look into EPLI insurance
• It’s all about your Cash Flow!
  • The goal of the game is to survive. Make sure to play the game accordingly.
  • Create what if projection to see how difference scenarios can play out.

What options do I have to control my labor costs?

I can DO NOTHING

• Government assistance is on its way for small businesses.
• The idea being, you have the option to hold out until you have more information.
• Things you may want to take advantage of or should keep an eye out for:
  • SBA Programs https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
    • Economic Injury Disaster Loan
    • Express Bridge Loan (those with current relationships with an SBA Express Lender)
    • Lender Match – https://www.sba.gov/funding-programs/loans/lender-match
  • Federal, State & Local provided loans and grants

I can FIRE an employee

• Firing is the decision to terminate the current employment agreement you have with your employee.
• Know YOUR Liability
  • Are you subject to pay anything stated in your employment contract? (severance, Benefits, PTO, etc.)
• Know What This Means for YOUR EMPLOYEES
  • Employees can take advantage of Unemployment Compensation.
  • When will their benefits end? (Check with your broker to identify if they lose benefits the day of termination or maintain them until the end of the month)
• Suggested Best Practices would include:
  • Provide employee a termination letter, have a witness present and have all parties sign off.
  • Communicate the next steps to employees. Don’t make them figure it out themselves.
    • Provide step by step information on how they can apply for unemployment compensation.
    • Explain to them this termination constitutes a “Qualified Life Event”, allowing them to apply for medical coverage on the Exchange.

I can LAYOFF an employee

• A layoff is a decision to terminate the current employment agreement you have with the employee. The main difference from firing is a layoff may be only for an undetermined but extended period of time.
• Treat layoffs similarly to firing, but make sure to provide the employee with an appropriate letter.

I can FURLOUGH an employee

• Furlough is mandating an employee goes on leave without pay.
• Know YOUR Liability
  • Employees can take advantage of PTO while being furloughed.
  • If employees decide to work while on furlough, even something as simple as checking or responding to emails, the employer is responsible for paying the employee for their time.
• Know What This Means for YOUR EMPLOYEES
  • Employees can take advantage of Unemployment Compensation
  • Employees retain the right to return to their job.
  • Employees typically retain access to health insurance. (Confirm with your broker and plan documents)
• Suggested Best Practices would include:
  • Provide a Furlough Notification, have a witness present and have all parties sign the document
  • Communicate next steps to employees.
    • Provide the employee step by step information on how to apply for unemployment.
    • Make them aware that they do retain their jobs.
  • Ensure employee does not work during furlough. Remove all remote access to email and intranet files.

I can CUT HOURS or CUT WAGES

• Know YOUR Liability
  • As of April 2^nd, employees must be provided access to Emergency FMLA and Emergency Sick Leave.
  • A change in employee pay could trigger and employees FLSA exemption, making them eligible for overtime.
  • Click on (LINK HERE) to learn more
• Know What This Means for YOUR EMPLOYEES
  • If hours are significantly cut, employees may be eligible for unemployment compensation. Although it will be only partial, they still can potentially take advantage.
  • Employees retain access to health insurance.
  • Employees may be eligible for overtime pay, which varies by state.
• Suggested Best Practices would include:
  • Know your states unemployment compensation thresholds.
  • Communicate to employees why hours are being cut and that they can apply for unemployment compensation.
  • Consult with your attorney before making any decision if you do not know what FMLA or FLSA is!

For those doing business in Pennsylvania, here is the contact information for Jay Borowsky if interested in seeking legal advice on these and other business matters

Jay M. Borowsky  | Esquire  |  215.253.4396