Coronavirus: Compensation Considerations
Navigating Employee Compensation
As the economy continues to suffer and business dries up due to lockdowns nationwide, employers have to be judicious with what they can offer employees in terms of work and pay. With no clarity as to when things might return to normal (or if they even will for some), companies everywhere are planning as if revenue will be scarce, and that means maybe having to severely cut back hours or lay off employees to keep the doors open, as much as it may pain you. Fortunately, there are options available to help you and your employees through these hard times.
Frequently Asked Compensation Questions Amid Coronavirus Crisis:
- COMPENSATING NON-ESSENTIAL EMPLOYEES
- WORK FROM HOME COMPENSATION
- SICK AND MEDICAL LEAVE
- SBA LOANS
Compensating Non-Essential Employee
Should I continue paying non-essential employees?
The most immediate question employers are facing is how to handle employees deemed “non-essential” during a time when everything is scaled back to a bare minimum. While there’s no right answer, or at least not a legally mandated one, every employer should weigh the welfare of their employees against the survival of the business itself, the company that all employees are counting upon. Most want to take care of loyal employees during this time but are facing limited work or scarce funds.
One option for employers is to encourage employees to take paid time off or paid sick leave during this period of isolation and inactivity. Employers may require employees who are exempt under the U.S. Fair Labor Standards Act (typically salaried employees) to use vacation or paid time off in the case of a workplace closure due to COVID-19. For able businesses, continuing to pay employees can help prevent further instability, even if it’s at a reduced rate. In some cases, the decision of whether to stay open and continue to pay employees is made for the employer, as more and more state governments have issued orders closing non-essential businesses.
For those who are looking to keep their entire team on board but are short on funds, the Small Business Administration is offering Economic Injury Disaster Loans in states that have requested assistance.
Work from Home Compensation
Do I have to pay my employees their full salary while working at home?
What you are obligated to pay an employee depends on their status as exempt or non-exempt under the U.S. Fair Labor Standards Act (FLSA).
Employees who are exempt under the FLSA must generally be paid their full salary for any workweek in which they perform any work. However, employers are not required to pay the exempt employees overtime pay for any work beyond forty hours in a week. Most exempt employees fall into the category of professional, administrative, or executive positions.
Non-exempt employees are paid at least a minimum wage for the hours they work in a week up to forty, at which point they earn time-and-a-half for any subsequent hours. However, unlike exempt workers, if they are not working in a given week, employers aren’t required to pay non-exempt employees.
While working at home can blur the lines between work time and personal time, employers should take care in how they manage hours and payroll throughout this period. While some might assume that working hours may stay steady or even decrease, early returns show that the workday can extend another three hours for some remote workers. Have any non-salaried employees track their hours, and be sure that you’re paying for the time they’re working, including overtime.
Sick and Medical Leave
Do I notify employees of their rights to sick leave and medical leave?
As an employer you should notify your employees of their rights to sick leave and medical leave under the Family Medical Leave Act (“FMLA”), Families First Coronavirus Response Act (the “Response Act”) and the Emergency Paid Sick Leave Act. These pieces of legislation create a patchwork by which employees can take the time off needed to deal with not only their illness or the illness of a family member, but out of school children as well.
Employees who have been with an employer for thirty days are eligible for leave under the current iteration of the FMLA, which runs for twelve weeks though only the last ten are paid, and at a partial salary. This leave can be used to take care of ill family members and children who are without daycare due to the pandemic. The Response Act authorizes all employees up to two weeks paid sick leave for those quarantined or experiencing COVD-19 symptoms.
What do I have to do if I’m shutting down my business?
For smaller companies, closing their doors might just involve laying off a handful of employees, but for bigger businesses, there are other considerations when dealing with layoffs.
In normal circumstances, large employers are required to let their employees know that mass lay-offs are coming. Under the provisions of the WARN Act, businesses of more than one hundred employees planning to lay off over fifty employees are typically required to provide employees with sixty days’ notice. However, there are exceptions in cases of “unforeseeable business circumstances, faltering businesses and natural disasters” that would permit shorter notification. Given that the coronavirus outbreak has proven to be nothing if not unforeseen, employers may meet that criteria. Employers are also exempt if the layoffs are less than six months in duration, provided that they don’t otherwise trigger WARN.
How do I pay my employees if I’m shut down by the government?
Most employers would undoubtedly want to keep paying all of their employees throughout the ongoing crisis, all things being equal, but external forces have shut down many businesses and forced many to consider how to pay for anything, given a lack of financial resources. Fortunately, there are some lifelines out there for businesses looking to stay afloat.
As previously mentioned, the SBA is offering Economic Injury Disaster Loans to businesses affected by the coronavirus of up to $2 million with an interest rate of 2.75% and long-term repayment plans. States are also offering their loan and grant programs for businesses that need funds; you can find a full list of participating states here. And the recently agreed-upon CARES Act would create a $367 billion loan program for small businesses hurt by the coronavirus.
If you have questions about employment laws or the new aid packages, you don’t have to try and figure them out on your own. LegalShield Members can speak with an attorney and save needed money on expensive legal fees. Small Business Legal Plans start at $39 a month.
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