WeddingPro Guide to COVID-19 Employment Issues: Furloughs, Layoffs and Wage Reductions

The coronavirus (COVID-19) pandemic and resulting business interruptions are forcing many wedding pros to make difficult decisions about their employees. To help, WeddingPro has partnered with the employment law firm Littler Mendelson to answer your most pressing questions about how to handle these tough employment decisions. 

Let’s break down the basics—what are my options and what do they mean?

Employers can take various approaches to their operations during the COVID-19 pandemic. Some employers are continuing operations with a fully remote work staff. Others, however, are not able to continue operations remotely. Many WeddingPro vendors are finding they need to temporarily close because their state or local government is prohibiting large social gatherings, such as weddings. If this is the case, you may need to cut costs and expenses, including employee salaries. 

Some of your options are: 

• Furlough your workers: Requires your employees to take unpaid leave, either for days or weeks. The employees are still employed by you and generally return to their jobs once the furlough ends, but are not working or being paid during the furlough. Most furloughs are temporary and should not last for more than a few months.
• Lay off your workers: Completely terminates your workers’ employment. A layoff can be permanent or temporary, with the option to rehire the employee after a period of time.  
• Reduce your workers’ hours and/or pay: Keeps workers employed while reducing their schedule and/or pay. Although this may be the right solution for you, keep in mind that a reduction in pay or hours may be difficult for your staff.

If I furlough my employees, would they be eligible for unemployment benefits?

In light of COVID-19, many states have eased the eligibility requirements for unemployment benefits, and furloughed employees may be eligible. Keep in mind that a reduction in hours, not just a complete termination of employment, may qualify an employee for unemployment benefits. This may help if you need to reduce your employees’ hours while still keeping them on staff part-time.

The federal Coronavirus Aid, Relief and Economic Security Act (CARES Act) temporarily expands the unemployment insurance system through December 31, 2020, to provide payment to nearly every employee displaced by COVID-19, and even to those not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history and others). The CARES Act expands benefits by temporarily raising the maximum weekly payment across the board by $600, extending benefits for 13 weeks beyond what states already allow and waiving the usual one-week waiting period for unemployment benefits. 

What notice do I need to provide my employees for a furlough or a layoff?

There are state laws that may require you to provide notice of a change in pay or scheduled hours, or a termination of employment, whether through a furlough or a layoff.  For a change in pay or hours, you should generally give written notice no later than the day before the change will be effective, and some states may require earlier advance notice. You cannot make the change effective retroactively.  

There are federal and state laws that require specific notices for large furloughs or layoffs, but these requirements may not apply to small businesses. Littler’s guide to these federal and state notice laws, including information on when they apply, is here. 

If I furlough my employees, do I need to offer them any of their benefits, including any paid sick leave?

In the event of a furlough, wedding pros should review their policies and applicable state law to determine whether employees may use available sick leave, PTO, or vacation during this time. There is also a risk that a furlough could require a wedding pro to pay out an employee’s accrued PTO, but this will depend on various factors. You will need to check your benefits plan document to see if furloughed employees are entitled to continued health benefits under your plan. For more information, please refer to Littler’s information here.

What other things should I consider?

Suppose you offer other benefits, such as dependent care spending accounts, healthcare flexible spending accounts and qualified transportation expenses. In that case, you may want to tell furloughed employees to change their elections for these benefits during the furlough period.

As you can see, in each of these situations, there are many legal considerations.  We encourage you to review the additional information that Littler Mendelson has compiled to help you evaluate these legal aspects.

Information on COVID-19 and related legal requirements is changing rapidly, and we will update this post and our website as more information becomes available. This post is for general informational purposes. If you have specific questions about your business, we recommend contacting a legal or financial advisor.

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