As the coronavirus affects organizations across the globe, our primary responses so far have been based on prevention, protection, and business continuity. In Human Resources departments across the nation, this has taken a variety of forms: new practices and policies for remote working, paid leave, reduced hours, and even layoffs. The impact continues to evolve and change, but one thing is becoming evident: this is not a short-term, isolated situation. Now is the time to start thinking of the potential long-term implications for your HR and Total Rewards programs.
To Pay or Not to Pay, that is the Question
One of the most pressing issues confronting HR professionals is the confluence of existing paid leave policies and organizational values. Are they robust enough to retain employees through this unique situation? Can we afford to do more? Or the flip side, we can’t afford to pay out all the accrued time off liabilities because of operating cash shortages. Both are real issues for many businesses. The Federal Government is working on passing a stimulus bill called the Families First Coronavirus Response Act. It hopes to provide relief to small businesses and American families by allowing the expansion of unemployment benefits, tax credits to help offset additional or mandated paid sick leave, and paid emergency leave.
Most organizations have some sort of incentive-based compensation plans – either bonus programs or sales commission plans. Best practice incentive design principals typically have financial and performance metrics included. Now is the time to start reviewing these plans for immediate and longer-term implications because instinctively, employees will be thinking about the impact on their pay. For salespeople who typically have a lower base salary in exchange for more significant, performance-based incentives, should sales quotas be adjusted to align with the business reality? Should recoverable or non-recoverable draws be implemented? How do we make adjustments for that group? What about everyone else who may be on an annual bonus program tied to specific business objectives or metrics that will be impacted by the business disruption? To ensure your employees are focused on key business drivers, what, if any, changes should be implemented?
In addition to the unstructured and creative business issues on your plate, don’t forget about the regulatory environment. Below we’ve highlighted a few to be aware of:
Important Compliance Reminders
The Department of Labor has not waived any of the provisions of the Fair Labor Standards Act (FLSA).
- Salaried, exempt employees generally must receive their full salary in any week when they perform any work
- Non-exempt employees must receive 1 ½ times their regular rate of pay for hours worked more than 40 in a workweek
- Employers must pay at least the minimum wage for all hours worked
Occupational Safety and Health Administration (OSHA)
While OSHA does not hold employers liable for inspecting remote working or home office locations, employers are still required to keep records of work-related injuries and illnesses that occur in a home office.
Worker Adjustment & Retraining Notification Act (WARN Act)
WARN Act helps ensure advance notice in cases of qualified plant closings and mass layoffs (typically 50 or more employees at a single site of employment). In situations where layoffs or more than a 50% reduction in hours occurs, the WARN Act can be triggered. It requires employers with 100 or more full-time employees to provide 60 days of advance notice to impacted employees. If the law is violated, employers must provide lost pay and benefits to each employee affected. While the WARN Act is a federal statute, some states also have employee and state-level notice requirements too.
Other Compliance Notes
Adjusting & reducing hours for non-exempt positions
- Be aware of and comply with any predictable-scheduling laws that are in effect. For instance, Seattle’s Secure Scheduling Ordinance requires employers to post work schedules 14 days in advance and are required to pay for half of the hours eliminated or changed.
- Make sure you comply with any employment agreements and collective bargaining agreements.
We know there is a lot on your plate! In the meantime, it is critical to work with business leaders to develop an action plan aligned with your business reality and start contingency planning today with an eye to the immediate situation as well as the short-term future.
Let us know how Compensation Works can help you!
Call me at 206-455-9028.