Many employees have spent close to two months (to date) staying at home in order to “flatten the curve” of COVID-19. Many employers are anxious about how to give their employees some sense of job security and how to keep their organizations afloat during this challenging time.
What leave measures are in place that organizations can use to help their employees? What legislation is available to help small businesses? In this Astronology®, we briefly review the actions available to help employers have some control over the financial and employee relations challenges created by the COVID-19 pandemic.
COVID-19 Legislation and its Impact on Employee Leave and Organizational Finances
In late March / early April, we saw laws enacted to help employers fight the challenges that COVID-19 brought. The first law was the Families First Coronavirus Response Act (FFCRA), effective April 1, 2020. It provides two types of leave: Federal Paid Sick Leave and Expanded FMLA Leave.
The Federal Paid Sick Leave offers two weeks of paid sick leave (up to 80 hours) at two-thirds of the employee’s regular rate (if full-time). This leave is offered under one of three conditions:
- The employee is unable to work (include telework) due to caring for an individual that was recommended for or has been subjected to quarantine / isolation orders from the government or a health care provider.
- The employee is unable to work (including telework) due to needing to care for an underaged son or daughter whose school or childcare provision has been impacted by COVID-19 (i.e. school closing, childcare unavailable).
- The employee is experiencing any other “substantially similar condition” (specified by the Health and Human Services Secretary).
This provision is set to expire on December 31, 2020. Please review the DOL website on the FFCRA for more details.
The Expanded FMLA Leave provides FMLA for an employee that is unable to work (including telework) due to needing to care for an underaged son or daughter whose school or childcare provision has been impacted by COVID-19 (i.e. school closing, childcare unavailable.) The first 10 days of leave are unpaid. Following the initial 10 days, up to 10 weeks of leave is paid at a rate of no less than two-thirds of an employee’s regular rate multiplied by the hours the employee would normally work. Please review the DOL website on the FFCRA for more details.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES) became law. Part of the CARES act includes the Paycheck Protection Program – a means to help small businesses and some non-profits to stay afloat while navigating the challenging waters of the COVID-19 crisis.
The Paycheck Protection Program (PPP) was designed for organizations with 500 employees or less or are categorized as “small” for the company’s industry by the Small Business Administration (SBA). The funds from the loan are to be used primarily to cover salaries, health benefits, office rent, and utilities. The funds cannot be used to pay for paid leave under the FFCRA, however. The PPP loan can transform into a grant if an employer can maintain its staff between the period of February 15, 2020 and June 30, 2020.
The roll-out of this program had a number of issues. In some cases, companies that the program was not intended to help were able to secure funding, while many small businesses were not able to get a share. As of April 23, 2020, funding for the PPP has been exhausted and many are waiting for additional funding to be added back into the program. As of April 24, 2020, it appears that an additional $320 billion have been approved for the program. In the meantime, however, some of the large companies that did receive funding have opted to return funds or decline their acceptance into the program.
Compensation Actions During COVID-19
Current pulse surveys have revealed actions some organizations have planned or are planning to take to quell the financial sting caused by the COVID-19 pandemic. Korn Ferry recently released their “Impact of Covid-19 on Rewards & Benefits” March 2020 pulse survey results. Takeaways from the survey include the following:
- 34% of participants have already frozen or are considering freezing salaries.
- Annual merit increases are being deferred or delayed by 15% of respondents. 26% of respondents are considering the same measures.
- 20% of participants have either already made salary cuts or are considering making salary cuts.
Short-term incentives also are being eyed for COVID-19 related adjustments. The survey mentioned that about a third of survey participants are considering taking or already have taken actions to adjust their short- & long-term and sales incentives. These actions include the following:
- Reducing, deferring, or delaying annual bonuses
- Adjusting performance targets in sales incentives
- Reducing, deferring, or delaying long-term incentives
- Adjusting performance targets for current long-term incentive awards
Only a few participants (7%) made long-term incentive adjustments.
Recognizing that this is still an evolving situation, Astron Solutions also is running a pulse survey to measure what compensation actions have been taken as of April 2020. Feel free to participate in our brief survey here: https://astronsurveys.com/surveys/pulse2020/ and receive a free copy of the survey results.
Returning to the Worksite
Many employers are being proactive and considering what work will look like once most cities and states are cleared to return to pre-COVID-19 work. Most likely, organizations will have to gradually add staff back into worksites, and also distance workspaces for employees working on the job premises. Some businesses plan to enact alternative work schedules so employees are not traveling to the office at high commuter times and to keep control over how many employees are at the worksite at one time.
Office cleanliness also will have to change. Getting in contact with building owners / managers now, and learning what their procedures will be to keep the building COVID-19 free moving forward, will allow employers to plan what additional measures they can take to help their staff feel safe. These plans most likely will include having items such as hand sanitizer, appropriate germicide, gloves, and masks on hand. In addition, keep an eye on the Centers for Disease Control and Prevention’s website. Currently they have everyday steps for employers to take on how to thoroughly clean and disinfect.
Simple yet effective, reminding staff that if they feel sick to stay home also will help prevent a second outbreak of COVID-19.
Let’s Hear from You!
How has COVID-19 impacted your organization’s compensation plans for 2020? Does your organization plan to make COVID-19 compensation changes in the future? Has your organization taken actions mentioned in this article already? Is there a plan in place for when your organization is cleared to return to the worksite? We want to hear from you! Please share your thoughts, ideas, and actions in our comment section below.