When the world seems to be spinning off its axis, it’s reassuring to have workplace experts and strategists who can help make sense of the world at work under dire circumstances.
While employers are scrambling to address myriad issues — such as, business disruptions and extended employee absences — because of the coronavirus pandemic, the first order of business is to keep your employees safe and calm, and to re-evaluate your compensation and benefits policies and practices.
WorldatWork Content Director Deirdre Macbeth, Esq., this week took part in the HR.com webcast, “Inoculating Your HR Policy,” moderated by Workspan columnist Charles Epstein, president of Backbone Inc., and the co-host and producer of the WorldatWork podcast, Work in Progress.
The following Q&A is between Epstein and Macbeth.
What are some key compensation practices for employers to consider as part of their business continuity planning for the coronavirus?
One of the most imminent compensation issues facing employers right now is how they’re going to pay their exempt and non-exempt employees in the event of workplace absences. Many employers are still unsure at this stage what they’re going to do, but as the coronavirus situation rapidly evolves, employers need to start planning so that they know what to do when reality actually hits the workplace.
If there’s any unionized workforce, employers will need to look at any applicable collective bargaining agreements in place and determine if any changes need to be made so they can work proactively with their union to negotiate and implement any of those changes.
For others that are not unionized, employers need to think about two key situations. The first situation is 1) when an employee is diagnosed with the coronavirus; or 2) when a family member is diagnosed with the coronavirus.
Most employers have leave policies in effect that treat the situation as a personal or family illness. Employers then need to look at: 1) the leave laws that apply; and 2) allowing their employees to use any available paid leave time to cover the absence. Also, if the illness is due to the employee’s own illness, there might be short-term disability benefits that apply for that individual. Employers should be working now with their vendors to confirm that the coronavirus is actually covered under their short-term disability policy. The assumption is “yes, it should be covered,” but it’s prudent to confirm that item now. Exempt and non-exempt employees should be treated the same under applicable leave policies, so it’s a simpler situation for employers.
The more complicated scenario is the second situation when you have an employee who is willing and able to come to work but due to circumstances beyond their control, they’re not able to come to the workplace. It could be something like a public transportation issue, or an employer workplace or worksite is closed, or the employer has implemented a remote working environment. In that situation, exempt employees, if they’re able to perform work remotely and work part of the work week at least, under applicable wage and hours laws, they usually receive their regular pay.
Non-exempt employees, however, typically would not be entitled to receive pay unless they perform work for the week. So, that is the decision point for employers. They need to start thinking about:
- What compensation, if any, will they provide to their non-exempt workforce?
- Will they make them use available paid leave time?
- Is there partial or full pay that they could implement for this group?
There’s a lot of creative ways employers can look at it. They could come up with a special emergency leave pay that would only apply for this situation or some other type of temporary paid leave benefit if there’s a concern about just continuing their regular pay. Employers can also act on an incremental basis. This is an evolving situation and employers aren’t really going to know the long-term impact yet of coronavirus to the workplace. So, if they want to make decisions on a weekly basis and allow an emergency leave benefit to apply, week by week, that should be fine as well.
The key here is for employers to start thinking and planning for it, and to be cognizant of the public relations impact for their decision to pay or to not pay their workforce.
How should employers adjust their paid/unpaid leave policies to help reduce the spread of coronavirus?
First, employers need to look at their policies and determine if any changes need to be made to make sure that they’re consistent with the guidance provided by public health authorities. The most important thing right now is that if employees are feeling ill that they stay at home and they don’t subject others in the workplace to further risk and potential spread of the virus.
Second, employers need to make sure that there are no penalties that apply if an employee wants to stay at home because they’re feeling ill. For example, if there’s an attendance infraction that typically applies, then the employer should consider waiving that provision on a temporary basis.
Also, employers need to think about making sure that there’s flexibility in their leave policies. If applicable leave laws don’t apply, or the employee is not yet eligible for leave laws or even the employer’s own policy for leave, the employer can still just provide a special unpaid leave or an unpaid family leave. Or, create a separate special health policy or pandemic policy that addresses the situation so that they allow people to be absent from work if they are feeling ill or if a family member is ill.
Employers should also remove any restrictions on the use of paid leave benefits. For example, there are a lot of employers that might have a waiting period before you can use your paid leave time, or they prohibit a negative balance of PTO or vacation hours. Employers can look at ways they can temporarily waive these restrictions so that employees are not concerned about income continuation. That is, they don’t try to come into the workplace when they’re sick because they want to make sure that their income continues. Any efforts to ensure that employees are staying home and taken care of while ill should be taken.
What kind of issues might arise for employer-sponsored health and welfare plans with the coronavirus? How can employers work to proactively address these issues?
Thanks to recent action by the federal government, testing for the coronavirus has now been deemed an essential benefit under the Affordable Care Act and covered by both private health insurance and Medicare and Medicaid. There may be some copays or deductibles that might still apply but many states are in the process of either requesting or requiring their insurers to waive these cost-sharing provisions. In either situation it’s still great that the coverage is in fact provided now.
A secondary issue is the time period for coverage on the health insurance plan for employees who are not actively working, and their ability to continue making insurance premium payments when they’re on a leave of absence. Employers should be proactive and look at their plan document or their certificate of coverage depending if they’re a self-funded or a fully insured plan and look at the time period that applies for coverage when an employee is no longer actively working and then start conversations with the insurers if they want to talk about extending or waiving that period and what actions they would need to take to put those changes into effect.
For the premium payments, when an employee is on a leave of absence, it’s their obligation to continue making payments of their portion of the insurance premium. Typically, employers pay a portion of it and employees pay a portion as well. And while they’re actively working, their portion is deducted through payroll deductions. When they go on a leave of absence, if they continue to receive pay (for example, if they’re using PTO or vacation or sick leave), the employer can still use the payroll deduction to receive their insurance premiums. But when they transition to an unpaid status, that’s when it becomes more complicated and employees could run into an issue where they’re not able financially to continue providing their portion of the premium payments.
Many employers have existing policies and practices in place that address this situation, but they need to review these and think about what they’re going to do if an employee is not able to continue their portion of the premium payment. The employer has the option to advance the payment with subsequent repayment from the employee when they return to work. But this is a very individual situation to each employer, and they need to decide the action they’re going to take or if they’re just going to allow the coverage to lapse at that point.
What actions should employers be taking now with their variable pay incentive plans and their short-term incentive plans?
I’m sure these plans are low priority for a lot of employers right now and I can completely understand with the barrage of other actions needed to be prepared for the coronavirus. But this is a key item that employers should not let sit on the back burner. They should be proactive and get ahead of the curve and start looking at their sales incentive plans and their short-term incentive plans and determine if there’s going to be any impact to these plans during the year, especially now where we’re getting near the end of the first quarter.
A lot of financial and performance metrics are included in these types of plans, so employers can look at whether or not, based on the current state, or projected future state, of the business, these objectives and metrics are going to be met, or whether they should start thinking about a contingency plan to put in place to make adjustments to these plans. Naturally, employees are going to be very keenly focused and thinking about impacts to their total compensation if there is a business disruption due to the coronavirus. So, while a contingency plan is likely fine for a short-term incentive plan for most employees, where the employer can implement changes later in the year if certain metrics are not met, other professionals like sales professionals might need more immediate changes to their plan. Especially where their metrics are driven more on a quarterly or even monthly basis for the quotas and other metrics that they must satisfy, there might need to be more imminent action from employers to make adjustments to their sales compensation plans now.
What kind of wellness benefits or initiatives should employers implement to prepare their workplace for the coronavirus?
Right now, employers should really be promoting the use of telehealth services. Many insurance companies have been touting this for years. Over the past five years it’s become increasingly popular. So, to make employees aware of this and take full advantage of it, let them receive initial treatment from the doctor from the comfort of their homes so that they’re not coming into the workplace. It just helps reduce the spread of the virus.
Also, employers should be looking at ways to regularly promote communication on good hygiene, and disease prevention measures in the workplace. However, this doesn’t have to be like a draconian “doom and gloom” e-mail distribution. A lot of employees’ eyes just glaze over when they see those lists of things they should be doing. Think of ways to make it more engaging and creative:
- Do a lunch and learn.
- Make a trivia contest out of it.
- Have groups compete against each other in the workplace.
Come up with creative measures to make sure employees are still getting this very helpful information but do it in a much more interesting format.
Also, employers should be using a touch-free work environment for those that are still operating in the workplace. No handshakes, no fist bumps, but maybe you can come up with a different way for greeting each other, such as a fun wave or an elbow bump. There are ways to be creative and still have an engaging environment.
The whole point is you don’t want to incite panic. We’re just getting back to basics and making sure everyone is using good health and hygiene practices. You want to keep a very calm, safe and reassuring environment for everyone in the workplace.
Special thanks to Assistant Editor Brittany Smith for transcribing the HR.com webcast.